Raphael Bostic, Interview: Washington Post Live

“Well, I’ll say two things on this. First, I don’t think it’s as uncoordinated at some might think. You know, our leaders here, the chair and others in Washington, talk regularly with their colleagues across the world, and so there’s an awareness of what we’re seeing and a collective understanding about how it all fits together that informs our thinking about the exposure of the U.S. economy to things that are happening overseas and the exposure of overseas economies to things that are happening here. And all of that is taken into account. So I do think that that is an important thing for people to understand that we are not on an island. Our economy is not on an island. So it wouldn’t be appropriate for our policy to be there either.”

“And then the second thing I would also say is it’s important to remember that at the beginning of this tightening episode, monetary policy was at its maximally accommodative stance. We were basically at zero, which is trying to push the economy as strong as possible, and you see the same basic stance in central banks all the way across the world.”

“And one of the things that we’ve learned over the last, really, 10 years or so is that the Federal Reserve was a little too aggressive in slowing growth as we got closer to maximum employment, and there was as risk that maybe we were preventing the economy from including people in terms of employment that we might have otherwise. So, in our new framework, we basically took the position that we wouldn’t slow the economy because of the fear that the economy was going to overheat until we actually saw inflation start to move, and then once that happened, then we would slow it down. And I think that helped right before the pandemic lead to millions of people to get jobs that would not have under previous approaches to monetary policy.”