Atlanta Federal Reserve Bank President Raphael Bostic on Monday said that he would like to see the central bank pause its steady rate hikes in order to gauge the health of the economy.
“I think the appropriate policy is really to just wait and see how much the economy slows from the policy actions that we’ve done,” Bostic said in an interview on CNBC.
The Federal Reserve has steadily raised its benchmark rate to a range of 5%-5.25%. Traders in derivative markets expect the Fed to pause in June and then to begin to cut rates as the year progresses.
Bostic said rate cuts are not in his baseline forecast, saying that, if anything, the Fed may need to hike rates more.
“I would say we might have to go up. What we’ve seen is that inflation has been persistently high,” he said.
In a separate CNBC interview, Chicago Fed President Austan Goolsbee said he had yet to decide whether to back a pause.
“We have still got a few weeks before the next meeting,” he said.
The Fed will next meet June 13-14.
Goolsbee is a voting member of the Fed’s interest-rate committee this year. Bostic is not.
Goolsbee said the economic outlook was uncertain and he was watching “a lot more data than we normally do.”
The Fed is trying to decide where the U.S. economy is in the business cycle.
Goolsbee said he was watching to see if the pullback on bank lending was slowing the economy as he expects. In addition, he said, “a lot of the impact” from past rate hikes has not yet hit the economy.
“Inflation is improving, but it is not improving that rapidly,” he said.
“We want to be sure, to the extent possible, to get inflation back to the correct path without starting a recession,” he said, adding, “You don’t want to land the plane nose down.”
Goolsbee also said that his vote for a rate hike earlier this month was “a close call.”
In a separate town hall discussion, Minneapolis Fed President Neel Kashkari sounded a more worrying note about inflation.
“We should not be fooled. We still are well in excess of our 2% inflation target and we need to finish the job,” Kashkari said. He is also a voting member of the Federal Open Market Committee this year.
Stocks
DJIA,
SPX,
were set to open higher on optimism about debt-limit talks. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.5%.
