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Bostic: Fed should avoid 'prematurely' declaring win in jobs battle - Metro US

Bostic: Fed should avoid ‘prematurely’ declaring win in jobs battle

FILE PHOTO: Federal Reserve Bank of Atlanta President Raphael Bostic participates in a panel discussion in Atlanta

WASHINGTON (Reuters) -A spell of high inflation in the U.S. could last as long as 9 months, but the central bank should still avoid declaring victory too soon in the battle to regain 7.5 million jobs lost during the pandemic, Atlanta Federal Reserve president Raphael Bostic said on Wednesday.

The recent jump in prices will prove temporary, Bostic said, but “temporary is going to be a little longer than we expected initially…Rather than it being two to three months it may be six to nine months,” Bostic said in an interview with National Public Radio’s Morning Edition.

But Bostic said the Fed should nevertheless keep in view the 7.5 million lost jobs when it assesses where the U.S. recovery stands. Some policymakers think that retirements and other individual decisions may make it hard to return to the pre-pandemic level of employment.

“That is a benchmark we all need to keep our eye on,” Bostic said. “We have to make sure our policies don’t pivot in ways that make it look like we are declaring victory prematurely.”

The Fed at its last policy meeting indicated it may be preparing to raise interest rates sooner than expected because of recent inflation readings that have pushed measures like the consumer price index to multi-year highs.

Bostic was not asked and did not volunteer his view about when the Fed’s target policy interest rate might need to increase from its current near zero level, or when the Fed should begin reducing its $120 billion in monthly bond purchases.

(Reporting by Howard Schneider; Editing by Toby Chopra and Chizu Nomiyama)

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