Atlanta Federal Reserve President Raphael Bostic on Thursday said he is firmly in the camp that supports quarter percentage point interest rate hikes, saying that it was wise for the central bank to move cautiously.
“Right now, I’m still very firmly in the quarter-point move” camp,” Bostic said, in a roundtable with reporters on Thursday.
“I do think we’re in a period now where it is appropriate for us to be cautious,” Bostic said, in part because a delayed impact of the Fed’s rapid rate hikes last year might hit the economy soon.
“There is a plausible case to suggest that we’re going to see some more robust slowdown,” he added.
On Wednesday, in an essay published on his regional Fed’s website, Bostic said he wanted the Fed to raise its benchmark interest rate range to 5%-5.25%.
At the moment, the benchmark rate is in a range of 4.5%-4.75%.
Bostic told reporters that he will base where his view of the appropriate level of rates on incoming economic data.
“There is a case that could be made that the Fed will have to go higher than the 5%-5.25% level he now prefers, Bostic said.
Bostic said on Wednesday that he wants rates to get to his preferred level and hold steady “until well into 2024.”
“I hope that one takeaway is that I have strong commitment to that,” Bostic said.
“I don’t want our policy bouncing around.”
Bostic said that there will have to be some kind of slowdown in the labor markets to get inflation down, but he said he thinks this doesn’t have to be catastrophic for the American worker.
There is a lot of momentum in the economy today. The Fed’s policy is to take away that momentum and let the economy run on its own, he said.
When that is accomplished, the labor market will be at a level that’s sustainable and we won’t see the volatility that have characterized so many weakening episodes in the past, he said.
U.S. stocks
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were trading higher in mid-afternoon trading. The yield on the 10-year Treasury note
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remained over 4%.
