Some Republican lawmakers fear that Atlanta Fed Chairman Raphael Bostic is too focused on his “wake-up call” agenda as inflation rages at levels not seen in decades.
Bostic, who is black, has spoken out in recent months against racial injustice while taking an optimistic view of inflation, one of the components of the Fed’s dual tenure.
As crime rates in American cities soar and the Biden administration strives every day to distance itself from the ‘Defund the Police’ movement, one of the people who are rumored to be part of the President shortlist for the Fed chair advocates letting criminals out of jail in order to stimulate the economy, ”a Republican Senate adviser told FOX Business. “With consumer prices hitting new highs, the Atlanta Fed chairman should focus on the threat of soaring inflation, not attacking the US law enforcement system.
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Basic personal consumption spending, the Fed’s favorite inflation reading, rose 0.5% in May and 3.4% a year, the highest in nearly three decades.
Growing inflation fears have put the central bank on the defensive. The Fed last August changed its policy, saying it would allow inflation to “moderately” exceed 2% “for a while” as it tries to bring the economy back to full employment.
Bostic has been of the view, like Federal Reserve Chairman Jerome Powell, that the recent surge in inflation will be temporary.
“We’re going to have a somewhat chaotic period with inflation in the coming months… but I don’t see this as a major concern,” Bostic told reporters after a virtual event organized by the Economic Club of New York in March.
In May, he said the Fed would not fully understand the dynamics of inflation until the fall or later, and supported the continuation of the central bank’s easy money policy. But more recently, he warned that the Fed may need to act faster to stamp out inflation.
The Fed is also struggling to fulfill its employment mandate, with the unemployment rate hitting 5.9% in June, as the economy faced a deficit of 6.8 million workers from past levels. ‘before the pandemic. This, despite a near-record 9.2 million job offers.
“The Fed’s mandate is to seek both employment and price stability to the maximum, and we take both into account when it comes to setting monetary policy,” Bostic told FOX Business.
“With inflation data stronger than I expected earlier in the year, I said it was appropriate to plan for the start of the downsizing process,” he added. “On our maximum employment term, we are looking at both short-term issues like those caused by the pandemic and long-term issues that prevent people from fully participating in the workforce.”
But as the image of inflation has continued to deteriorate and the labor market remains below its potential, Bostic has continued its “wake-up” program.
During a Fed event on “Racism and the Economy,” he said that “incarceration is a drag” on the Fed’s ability to meet a maximum employment target.
He cited a Richmond Fed Study which found that more than two-thirds of those previously incarcerated remained unemployed or underemployed five years after leaving prison.
The study found that the unemployment rate for black men with a high school diploma who were incarcerated is 25% higher than those who were not and that incarceration reduces lifetime incomes by 33%. % and employment by 22%.
White males incarcerated with a high school diploma see their lifetime incomes reduced by 43% and their jobs by 27%, according to the study. The largest percentage drop for white males is because white high school graduates have higher incomes than black high school graduates.
Bostic argued that incarceration and the US criminal justice system “inhibit global competitiveness” and “may have the effect of exacerbating racial disparities in employment, income and wealth, which may limit the economic mobility and resilience and ultimately constrain labor markets and compromise the performance of the economy as a whole. “
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This is not the first time that Bostic has spoken out on social issues.
Earlier this year, he said there was “certainly merit” to the reparations and called the changes to voting laws in Georgia “troubling.” This came after last year he published a letter titled “A moral and economic imperative to end racism. “