The president of the Federal Reserve Bank of Atlanta, Raphael Bostic, said he prefers to keep interest rates low, no more than a 1 percent increase, to try to keep the economy healthy.
“If the economy goes the way I expect, I believe 75 to 100 basis points more will be appropriate,” Bostic said in a prepared speech in Fort Lauderdale, Florida, on Saturday. “It is clear that more is needed, and I believe that the level of the policy will be sufficient to stop inflation in the long run.”
Bostic’s plan is to move away from a 75% rate hike and continue to raise rates to 4.75%-5% over the next few meetings, which he described as the “minimum rate cut” the Fed would stand for. for a long time to continue lowering prices.
Fed officials raised interest rates by 75 basis points for the fourth straight time on Nov. 2, bringing the rate target to 3.75% to 4%. Several policy makers have signaled they could consider a 50 basis point hike when they meet in December, depending on what happens to the economy.
“In terms of movement, assuming the economy moves as I expect in the coming weeks, I would be comfortable starting to move away from 75 percent at the next meeting,” Bostic told the annual meeting of the Southern Economic Association.
Bostic’s view of around 4.75% to 5% as the overall risk is less severe than some of its hawkish peers. St. Louis Fed President James Bullard on Thursday called for rates of at least 5% to 5.25%, showing charts that described 5% to 7% as the policy rate that can be accepted using the versions of the popular monetary policy.
While Bostic reiterated that there is “hope” that the supply chain is slowing down, he said that inflation is a “mixed bag” and that more work is still needed to deal with price pressures.
“My initial view is that the macroeconomy is going to be strong enough that we can tighten policy to that point without causing undue disruption to output and employment,” Bostic said.
“I don’t think we should continue to raise prices until inflation drops to 2%. Because of the problems I discussed earlier, this would guarantee a recession and a recession,” he said.
Bostic said that when policy reaches too restrictive a level, he considers a long pause rather than a quick adjustment, to ensure that inflation does not resume in the same way as it did in the 1970s. He called on policymakers to “remain positive and determined” until inflation falls.
“If it appears that the policy is not restrictive enough to curb inflation, then a more aggressive policy may be appropriate,” Bostic said. “On the other hand, if economic conditions weaken significantly – for example, if unemployment rises sharply – it is important to resist the temptation to act by changing our policy until it is clear that inflation is safe to return to the long-term – target of 2%.
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