Two quarters of shrinking output would meet one rule of thumb for a recession.

George was the only Fed policymaker to dissent from the Fed’s June rate hike, out of concern that it was too large.

“However … policy changes transmit to the economy with a lag, and significant and abrupt changes can be unsettling to households and small businesses as they make necessary adjustments.” “I’m certainly sympathetic to the view that interest rates need to increase rapidly, recognizing that current rates are out of sync with today’s economic landscape,” she said, addressing a labor conference in Lake Ozark, Missouri. Separately, Esther George, president of the Federal Reserve Bank of Kansas City, sounded a more cautionary note in a speech Monday, in which she suggested the Fed’s large rate hikes could prove disruptive. Its rate is currently in a range of 1.5% to 1.75%, after a 0.75 percentage point hike at its June meeting, the largest since 1994. But they also carry the risk of tipping the economy into a downturn.Ĭonsumer prices rose 8.6% in May compared with a year ago, and a government inflation report Wednesday could show that they’ve ticked higher.īullard also said he currently supports a 0.75 percentage point increase in the Fed’s benchmark short-term interest rate at its next meeting later this month. Higher rates limit the ability of consumers and businesses to borrow and spend, which can cool growth and inflation. “Now we have lots of inflation, but the question is, can we get (inflation) back to 2% without disrupting the economy? I think we can,” he said.īullard’s optimism coincides with a rapid pace of interest rate increases by the Fed, intended to combat the highest U.S. But Bullard said in an interview with The Associated Press that the central bank wouldn’t have to drive the economy into a recession or significantly raise unemployment to bring inflation down to its 2% target. Louis Federal Reserve president James Bullard said Monday.įinancial markets are flashing signs that an economic downturn could arrive sometime next year, as Americans grapple with the highest inflation in four decades and the Federal Reserve pushes borrowing costs higher. economy is healthy and shows little sign of an imminent recession, and can withstand higher interest rates, St. “The tremendous momentum in the economy to me suggests” that the Fed could implement such an increase “and not see a lot of protracted damage to the broader economy,” Bostic said on CNBC on Friday.WASHINGTON (AP) - The U.S. The Fed is still getting away from boosting the economy and moving toward a more neutral stance, Bostic said, 'which is quite a different thing than formally restricting the economy.”īostic said he also supports a 0.75 percentage point rate increase later this month, as have other Fed officials such as Fed governor Christopher Waller. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said Monday that large rate increases are necessary because the Fed's rate is currently at a level that stimulates growth, even though an overheating economy has touched off inflation.

The Fed typically moves rates in quarter-point increments, but Chair Jerome Powell has said the Fed wants to move “expeditiously” to a level of about 2.5% to 3%, which would neither stimulate nor restrain growth. George noted after just four months of Fed rate increases, “there is growing discussion of recession risk, and some forecasts are predicting interest rate cuts as soon as next year.” Those concerns suggest the Fed is lifting interest rates “more quickly than the economy and markets can adjust,” she added. policy changes transmit to the economy with a lag, and significant and abrupt changes can be unsettling to households and small businesses as they make necessary adjustments.”

Feds next meeting