Atlanta Federal Reserve Bank President Opposes Further U.S. Interest Rate Hikes

One sentence summary – Atlanta Federal Reserve Bank President Raphael Bostic opposes further U.S. interest rate hikes, arguing that the current monetary policy is already tight enough to bring inflation down to the target rate of 2% over a reasonable period, and warns against over-tightening the policy to avoid unnecessary economic pain, although he is in the minority as most central bankers believe a policy rate of 5.5% to 5.75% is necessary to combat inflation.

At a glance

  • Atlanta Federal Reserve Bank President Raphael Bostic opposes further U.S. interest rate hikes.
  • Bostic believes the current monetary policy is already tight enough to bring inflation down to the target rate of 2%.
  • He warns against tightening the policy too much, as it may cause unnecessary economic pain.
  • U.S. central bankers are expected to maintain the Federal Reserve’s policy rate at the current range of 5.25% to 5.5%.
  • Bostic advocates for keeping the policy tight until inflation is on track to reach the 2% goal.

The details

Atlanta Federal Reserve Bank President Raphael Bostic has voiced his opposition to further U.S. interest rate hikes.

He argues that the current monetary policy is already sufficiently tight to bring inflation back down to the target rate of 2% over a reasonable period.

Bostic has warned against tightening the policy too much, as it may lead to unnecessary economic pain.

While he does not support easing the policy in the near future, U.S. central bankers are expected to maintain the Federal Reserve’s policy rate at the current range of 5.25% to 5.5%.

Financial markets have priced in the possibility of another quarter percentage point rate hike by the end of the year.

However, Bostic has been in the minority at the Fed, advocating against over-tightening the policy.

The majority of U.S. central bankers believed that a policy rate in the range of 5.5% to 5.75% would be necessary to combat inflation.

It is worth noting that the recent interest rate hikes since March 2022 have helped lower inflation from its peak of 9% to 3.2% in July.

However, the impact of falling rents on housing services inflation data has not yet been fully reflected, which suggests that inflation may already be close to the target.

Several indicators point to a cooling labor market, with fewer firms planning to raise prices and a decrease in the percentage of items with high inflation.

Furthermore, employers do not intend to raise prices to match higher wages.

Considering these factors, Bostic emphasizes the Fed’s need to remain resolute in keeping the policy tight until inflation is on track to reach the 2% goal.

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cnbc.com
– Atlanta Federal Reserve Bank President Raphael Bostic argues against further U.S. interest rate hikes
– Bostic believes that monetary policy is already tight enough to bring inflation back down to 2% over a reasonable period
– He cautions against tightening too much and causing unnecessary economic pain
– Bostic does not support easing policy in the near future
– U.S. central bankers are expected to leave the Fed’s policy rate unchanged at 5.25%-5.5%
– Financial markets are pricing in a possibility of another quarter percentage point rate hike by year’s end
– Majority of U.S. central bankers believed that a Fed policy rate in the 5.5%-5.75% range would be necessary to fight inflation
– Bostic has been in the minority at the Fed, advocating against over-tightening policy
– Interest rate hikes since March 2022 have helped lower inflation from a peak of 9% to 3.2% in July
– Falling rents have yet to be reflected in housing services inflation data, suggesting inflation may already be close to the target
– Business surveys show fewer firms planning to raise prices and the percentage of items with high inflation has decreased
The labor market is cooling and employers do not plan to raise prices to match higher wages
– Bostic believes the Fed must stay resolute on keeping policy tight until inflation is on track to reach the 2% goal

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