(Bloomberg) -- Federal Reserve Bank of Atlanta President Raphael Bostic said he’s increasingly convinced that the downward trajectory of inflation will probably carry on and economic activity will slow in the coming months.
“I’m sensing greater clarity about a few important currents,” Bostic wrote in an essay released Wednesday. “Our research and input from business leaders tell me the downward trajectory of inflation will likely continue.”
He went on to say, “our intelligence leads me to believe economic activity will slow in the coming months, in part because restrictive monetary policy and tighter financial conditions are creating greater restraint on economic activity.”
The comments are consistent with recent remarks Bostic has made, though he did not specifically address the path of interest rates in the essay. He has previously said he doesn’t believe more interest-rate hikes are needed, and was ahead of colleagues in calling for an end to increases.
The Atlanta Fed president pointed to a mix of economic figures and anecdotal data to support his view that the strong growth seen in the third quarter will cool, including stories of farmers delaying purchases of high-tech tractors and signals that companies’ pricing power is diminishing.
“I simply don’t think that kind of blockbuster expansion is durable given the current restrictive stance of monetary policy in combination with tight financial conditions,” Bostic wrote. “And while I always view economic projections with a healthy degree of caution — especially in these times of heightened uncertainty — I believe we can feel more confident in the outlook just now.”
He also emphasized the path to 2% will be “bumpy,” adding, “but we’ll get there.”
The US central bank held interest rates unchanged at a 22-year high for a second-straight meeting earlier this month. Officials gather again Dec. 12-13 and most Fed watchers expect them to keep rates steady again. Policymakers will update their interest-rate and economic projections at that meeting, which will provide further insight into the potential path of policy next year.
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Author: Reade Pickert and Catarina Saraiva