Connect with us

Hi, what are you looking for?


Bostic favors slower pace of rate hikes

FEDERAL RESERVE Bank of Atlanta President Raphael Bostic said he favors slowing the pace of interest rate increases, with no more than one percentage point more of hikes, to try to ensure the economy has a soft landing.

“If the economy proceeds as I expect, I believe that 75 to 100 basis points of additional tightening will be warranted,” Mr. Bostic said in prepared remarks for a speech in Fort Lauderdale, Florida, on Saturday. “It’s clear that more is needed, and I believe this level of the policy rate will be sufficient to rein in inflation over a reasonable time horizon.”

Mr. Bostic’s plan would shift away from 75-basis-point (bp) hikes and continue to raise rates to as much as 4.75%-5% over the next several meetings, which he described as a “moderately restrictive landing rate” where the Fed would hold go on hold for an extended period to continue to put downward pressure on prices.

Fed officials lifted interest rates by 75 bps for the fourth straight time on Nov. 2, bringing the target on the benchmark rate to a range of 3.75% to 4%. Several policy makers have signaled they may consider a 50-bp increase when they meet in mid-December, depending on what happens with the economy.

“In terms of pacing, assuming the economy evolves as I expect in the coming weeks, I would be comfortable starting the move away from 75-bp increases at the next meeting,” Mr. Bostic told the Southern Economic Association annual meeting.

Mr. Bostic’s view of around 4.75% to 5% as a peak rate is less aggressive than some of his more hawkish colleagues. St. Louis Fed President James Bullard on Thursday called for rates of at least 5% to 5.25%, showing charts that outlined 5% to 7% as the policy rate that would be recommended using versions of a popular monetary policy guideline.

While Mr. Bostic repeated that there are “glimmers of hope” that supply disruptions are easing, he said inflation was a “mixed bag” and there was still more work needed to battle price pressures.

“My baseline outlook is that the macroeconomy will be strong enough that we can tighten policy to that point without causing undue dislocation in output and employment,” Mr. Bostic said.

“I do not think we should continue raising rates until the inflation level has gotten down to 2%. Because of the lag dynamics I discussed earlier, this would guarantee an overshoot and a deep recession,” he said. 

Mr. Bostic said once policy reaches a sufficiently restrictive level, he envisions a lengthy pause in rates rather than a quick reversal, to ensure that inflation didn’t revive in a way similar to the experience of the 1970s. He called for policy makers to “remain purposeful and resolute” until inflation was brought down.

“If it turns out that that policy is not sufficiently restrictive to rein in inflation, then additional policy tightening actions may be appropriate,” Mr. Bostic said. “On the other hand, if economic conditions weaken appreciably- — for example, if unemployment rises uncomfortably — it will be important to resist the temptation to react by reversing our policy course until it is clear that inflation is well on track to return to our longer-run target of 2%.” — Bloomberg

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



A market vendor arranges assorted vegetables inside the Quinta Market in Manila, Sept. 19. Vegetable prices continued to rise in November. — PHILIPPINE STAR/...


More policemen are deployed in Divisoria, Manila as the shopping area is expected to draw bigger crowds ahead of the holidays, Dec. 1. —...


PHILIPPINE STAR/ RUSSELL PALMA By Arjay L. Balinbin, Senior Reporter A PROPOSED MEASURE seeks to require National Economic and Development Authority (NEDA) Board approval...


BW FILE PHOTO THE MANAGEMENT ASSOCIATION of the Philippines (MAP) is seeking the creation of a public-private sector advisory council for various sectors, in...


UNSPLASH THE HOLIDAYS shouldn’t be used as an excuse to binge-eat, warned a dietitian.  Christmas is just around the corner and with it comes...


MANILA Electric Co. (Meralco) has secured a certificate of exemption from the Department of Energy (DoE) from the competitive selection process (CSP) for the...

You May Also Like


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.