WASHINGTON (Reuters) – Inflation is the biggest headwind facing the U.S. economy right now and U.S. Federal Reserve officials “remain determined” to lower it back to the central bank’s 2% target, Atlanta Federal Reserve bank president Raphael Bostic said on Thursday.
Inflation “is way too high here in the United States….I and the Federal Open Market Committee remain determined to use our policy tools to bring inflation back toward our objective,” Bostic said in brief remarks prepared for delivery at the start of a conference at the New Orleans branch of the Atlanta Fed.
“I appreciate recent reports that include signs of moderating price pressures, but there is still much work to do,” Bostic said. The most recent report showed the Fed’s preferred measure of inflation running at a 5.5% annual rate.
The one-day research conference is closed to the press, but will discuss research on the “interplay between financial markets and monetary policy,” Bostic said.
That is an issue of central importance to Fed officials worried that markets may be underestimating their determination to bring inflation back into line even if that means higher than anticipated interest rates and a larger than anticipated economic slowdown.
Minutes of the Fed’s December meeting cited concerns that “misperception” of the Fed’s intentions and plans “would complicate the Committee’s effort to restore price stability” if financial conditions remain looser than needed to lower the pace of price increases.
“The research that will be discussed here is critical to our understanding of factors important in the efforts to bring down underlying inflation,” Bostic said.
He did not discuss his current policy views or preferences for the upcoming Jan. 31 – Feb. 1 Fed meeting.
(Reporting by Howard Schneider; Editing by Chizu Nomiyama)