In an interview with FOX, the Atlanta Fed President said, “With each successive variant that’s been introduced, the economy has slowed down, but the amount of slowdown has been less.” If the Omicron variant, he adds, follows a similar trajectory as the Delta variant, we will see slowing, but not as great as during the Delta variant surge.
Bostic is a voting member of the Federal Open Market Committee next year. That is the committee that sets monetary policy. He says the Fed could potentially raise rates two times in 2022 to handle inflation. The latest Consumer Price Inflation data shows prices surged by 6.2% over the past 12 months, the highest increase in 31 years.
Bostic adds, “if the economy continues to run hotter than we expected in terms of inflation being elevated, then a second one might become necessary, and our move might need to happen more quickly” he explained.
Bostic noted policymakers will follow the data when it comes to any move in rates and says the markets may need to prepare for a nimble timetable on tapering.
“For me, the early second quarter late first quarter of 2022 are all in play as reasonable alternatives for when we might stop our purchases,” Bostic explained because this allows the Fed to have options if inflation rises significantly from this point.
Bostic went on to say that COVID is driving inflation through supply chain disruptions and pent-up demand. He has heard from companies in his district and they do not see inflation coming down until well into 2022. “They say, well, it looks more like the middle of 2020 to maybe even to the third or the fourth quarter. They’re just not sure.”
Bostic believes that the fourth-quarter GDP growth will come in stronger than the third quarter which came in at 2.1% for the second estimate, as reported last week.
As for holiday sales, Bostic is monitoring as we move into year-end.
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