Fed's Bostic Says Inflation Is Still the Bigger Risk

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00:00Moving policy near or into accommodative territory risks pumping fresh blood into the inflation beast

00:07and threatening to untether the inflation expectations of businesses and consumers.

00:13I simply don't think that is the proper trade-off we should contemplate right now.

00:23Now, I view the Committee's monetary policy today as marginally restrictive,

00:28and I favor keeping the funds rate steady until we see clear evidence

00:33that inflation is again moving meaningfully toward its 2% target.

00:38By my lights, that's an appropriate position in this volatile environment.

00:43Now, I know you all are paying attention, so you doubtless realize that my view is not unanimous at the FOMC,

00:52or even here in this building.

00:54And that's fine.

00:55Now, my colleagues and I here and at the FOMC engage in robust discussion in pursuit of optimal policy outcomes,

01:04and it's the robustness of that discussion, the people coming together with different views,

01:09that ensures that we get to the best policy place that we can.

01:12I'll say, I'm grounding my approach to the policy trade-offs in the Committee's revised policy framework

01:19that we issued just in the summertime, and my colleagues are doing the same.

01:23And this framework says something very specific.

01:27It says, when the mandated objectives are intentioned,

01:31the strategy directs participants to determine which goal is most distant and will take longer to reach.

01:38The goal that is farther over the horizon takes precedence.

01:44If price stability is further away, then policies should be somewhat restrictive,

01:48or perhaps even more restrictive than at present.

01:51If sustainable maximum employment is more distant, then policies should be more accommodative.

01:57To reiterate, today, I view price stability as the more urgent priority.

02:02Now, of course, if conditions materially change, I'm willing to alter that stance.

02:09And more generally, moving forward, I will be guided by the data and qualitative information in hand,

02:14by my outlook, and by my assessment of the balance of risks to our mandates

02:20as the Committee seeks to achieve price stability and sustainable maximum employment for the American people.

02:26So, let's take a look.