FX168 Financial News (North America) News Friday (July 29) Atlanta Fed President Rafael Bostic said the US economy is “still far” from entering a recession and the Fed should raise interest rates further to control inflation.
“I don’t think the country is in a recession, although it is clear that a lot of people are hurting in the current situation,” Bostik said in an interview on Friday. “For this reason, we really need to address high inflation so that the economy can return to a more stable and sustainable state.”
The head of the Atlanta Federal Reserve was the first central bank to speak publicly since the central bank raised interest rates by 75 basis points for the second month in a row on Wednesday, which was aggressive in a series of increases in response to rampant inflation.
“I think we are going to have to do a lot more in terms of interest rate changes,” Bostick said. “How much of that and on which path will depend on how the economy develops in the coming weeks and months. We will get a lot of data in the two months leading up to the next meeting will give us a good idea of the right course of action.” “.
Chairman Jerome Powell also acknowledged after Wednesday’s meeting that an unusually large move might be appropriate, albeit a slowdown at some point in the future, with interest rates expected to continue to rise.
Powell also dismissed the idea that the US economy was already in a recession, citing continued job creation and a low unemployment rate, which reached 3.6% in June.
“One of the things that inspires me is how strong job growth is, which shows me that the economy has a lot of momentum. And in a recession, my team and I haven’t seen the field right now,” Bostick said.
Bostick said he’ll see if Americans’ fear of recession leads to a change in economic behavior, “but we haven’t seen that yet.”
The next meeting of the Federal Reserve will be held from September 20-21.
However, it should be noted that Thursday’s GDP data showed that after contracting in the first three months of the year, GDP declined at an annualized rate of 0.9% in the second quarter, the second consecutive quarter of declines that meet the technical definition of a recession. .
Some institutions commented that the decline in GDP for the second consecutive quarter fits the standard definition of a technical recession. But the official U.S. arbiter of recessions, the National Bureau of Economic Research, defines a recession as “a significant decline in economic activity that persists for more than a few months across the economy, usually seen in production, employment, real income, and other indicators.” Average monthly employment growth led of 456.700 for half a year leads to strong wage growth, however, the risk of an economic downturn has increased. Home builders and home sales have declined in recent months, as have business and consumer confidence.
After data showed the US economy contracted for the second consecutive quarter, US President Joe Biden said the US is on the right track and “will be stronger and safer after this turnaround.” “After last year’s historic economic growth and the full recovery of all private sector jobs lost during the pandemic crisis, it is not surprising that the economy has slowed as the Federal Reserve moves to lower inflation,” Biden said in a statement.
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