Insider Q&A: Atlanta Fed President Raphael Bostic foresees interest rates staying higher for longer

abcnews.go.com:

The Federal Reserve has reached a delicate stage in its fight against inflation

WASHINGTON — The Federal Reserve has reached a delicate stage in its fight against inflation.

Its policymakers have raised their key interest rate to about 5.4%, its highest level in 22 years, to try to slow borrowing and spending and cool inflation pressures. They now are considering whether to raise the rate even higher — a move that would heighten the risk of a recession — or leave it at its current level for an extended period.

Though inflation has slowed for the past year, it's showing signs of stickiness at its current levels. A recent uptick in gas prices sent inflation a bit higher in July.

Raphael Bostic, president of the Federal Reserve Bank of Atlanta and a member of the Fed’s interest rate policy committee, doesn't think another hike is needed. But Bostic favors keeping the benchmark rate at its current level well into 2024. The Associated Press interviewed Bostic in late August and it has been edited for length and clarity:

Q: Since March 2022, the Fed has rapidly raised its key rate. Yet unemployment has stayed remarkably low. How has the economy withstood the higher borrowing costs?

A. There’s your standard economic theory, and then there’s the real world. And a lot of times they don’t align. The economic theory would have said this kind of increase should have material impacts on economic output and employment. But we’re not in a normal time, and the pandemic is still having effects on the economy and on the conditions that American families and businesses face.

So we saw a lot of policy that was put in to support families and businesses. We saw a lot of families actually continue to get income and not be able to spend