Fed's Raphael Bostic says US economy may slow in orderly way

The US job market suggests that the economy may slow down in a relatively orderly way as the central bank bears down inflation by raising interest rates, according to Bloomberg Federal Reserve Bank of Atlanta President Raphael Bostic.

Bostic said in Face the Nation on Sunday that it was going to be hard, but it is not going to be easy. There will be some job losses. He said that we at Federal Reserve will do everything possible to avoid deep, deep pain. Bostic said that there are some scenarios in which that goal can be achieved, because he doesn't vote on monetary policy this year.

The US central bankers raised their benchmark interest rate by three quarters of a percentage point for the third time last week, and predicted that they would hike in the months ahead to cool red-hot price pressures.

Policy makers led by Chair Jerome Powell are moving quickly to reduce the highest inflation in nearly 40 years after being slow to spot the threat of a broadening of price pressures. Critics have slammed them for that error, although inflation has been worsened by Russia's invasion of Ukraine, which has boosted food and energy prices around the world.

Bostic echoed statements by other Fed officials that US demand needs to decline. He said it is starting to shrink, which will start to pay dividends by stemming inflation.

He said that the economy has a chance to absorb our actions and slow in a relatively orderly way because we are still creating lots of jobs on a monthly basis.

Consumer prices in the US increased by 8.3% in the 12 months to August. The Fed aims for 2% inflation measured by a different measure of price pressures called the personal consumer expenditures price index. It was up 6.3% in the 12 months through July, according to its most recent reading.

Policy makers have vowed to reduce inflation back to their target, even if that means harm to the US economy and its workers.

Officials call this an effort to slow down excess demand and put the labor market back into balance, a euphemism that glosses over the fact that many people could lose their jobs in the process. The labor market has so far remained strong with unemployment at 3.7%, but policy makers last week predicted that would rise to around 4.4% next year as they continue to raise interest rates.

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