During an interview with Bloomberg on Friday, Atlanta Federal Reserve President Raphael Bostic stated that unspent stimulus on things like infrastructure will put upward pressure on inflation, but if it’s spent on things that increase productivity, it will be “much less” inflationary than spending would be otherwise.
Host David Westin asked, “There’s been a fair amount of — we could call it fiscal stimulus or investment, whatever you want to say, that hasn’t really been expressed yet. It’s still to come. How does that read against the inflation issue? Because if there’s still money pumping into your region for things like infrastructure investment, that will push against inflation, will it not?”
Bostic answered, “It will have a little bit of that effect. But when I think about investment, I really think about it over the long haul, and if we invest in ways that increase the productivity of our workers and our communities, then the upward pressure on inflation will be much less than it might be otherwise. So, a lot of what matters here is what the investments are and how they’re deployed and then how that translates into the aggregate production in the economy.”
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