Fed likely to hike rates one more time and then hold steady, Bostic says
The U.S. central bank mosthasinterest rate rise ahead of it as it continues to work to lower high inflation, Atlantaeral Reserve President Raphaelsaid on Tuesday.
“move should be enough for us to then take a step backsee how our policy is flowing through the economy, to understthe extent to which inflation is returning back to our target,”said in an interview with CNBC.
“The economy still has a lot of momentumis performing quite strongly,inflation remains too high,”said, adding that “by pretty much every measure that you look at, current inflation isthan double what our target is. So there’s stillwork to be dI’m ready to do it.”
The‘s inflation target is 2 percent,as of February, the U.S. central bank’s preferred gauge – the personal consumption expenditures price index – was up 5 percent from the same month a year ago.
‘s outlooks forquarter-percentage-point rate rise, which would lift the‘s benchmark overnight interest rate to the 5 percent-5.25 percent target range. The central bank’s rate-settingeral Open Market Committee will next meet on May 2-3,the 25-basis-pointpenciled in collectively by officials in Marchbroadly expected by markets is also generally seen as the stopping point.
Once that prospective final rate rise takes place, thewill then be able tofor an extended periodsee how the cumulative impact of the many rate increases are affecting the course of the economy,said. When the policy rate has peaked, “I don’t have us really doing anything but monitoring the economy for the rest of this yearinto 2024,” he said.
is not a voting member of the FOMC this year.
He added that the banking-related financial stress that kicked off in Marchnearly derailed the‘s move toat the end of that month seemed to be easing.
Bank activity in the Atlantadistrictthe broader economy “seems to be stablehas gotten through this” period of stress. “But you never know when the next shoe might drop, so we’re going to stay diligent,” he said.
also noted that a pullback by banksother financial firms willtake some pressure off the, as reduced credit will probably be a headwind to growth.
“Uncertainty is going to cause bankers themselves to becautiousbecircumspect in terms of the loans that they extend. That’s going to do some of the work for usallow us to not have to raise interestas much as we might otherwise,”said.
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Fed sees credit drawdown looming, shifts toward pause on rate hikes