Atlanta Fed interim President Cheryl Venable said on Tuesday that inflation remains too high, a message heard from contacts across the Southeast, with the likelihood of easing price pressures tied to "unpredictable geopolitical events, particularly the Middle East conflict."
Venable said she regarded the labor market as "broadly stable," even though employers unexpectedly shed an estimated 23,000 workers in July and the unemployment rate dropped to 4.1% following a decline of around 250,000 in the number of people looking for work.
The stagnation in the size of the labor force, driven by the Trump administration's strict immigration policies and the aging of the population that remains, is "an unusual circumstance" for the U.S., Venable said, after years in which immigration offset a falling birth rate.
The situation "changes the formula to figuring out what constitutes maximum employment," with even weak or negative job growth able to lower the unemployment rate, she said.
Venable is not a voting member on interest rate policy and did not express an opinion in her essay about whether a rate increase is needed or not, a key issue Fed officials will next address at their September 15-16 meeting. The Fed held rates steady in late July, though three officials dissented in favor of a rate hike.
Venable is serving as Atlanta Fed president on an interim basis while a search continues for a permanent replacement for former President Raphael Bostic.
