Bostic (Fed): More interest rate hikes if inflation persists

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Rafael Bostic, a member of the Fed’s board, appeared open to further interest rate hikes than planned at the moment, in case inflation persists at the extremely high levels it is at today.

In particular, as reported by Bloomberg, speaking at an event in Florida, Mr. Bostic stressed that “we will definitely bring our interest rates to a neutral level, where we will no longer provide facilities.”

“If inflation remains high or levels that are high enough – that is, very high and does not return to the 2% target – then I will support a further move,” he added.

Mr Bostic also said he supported the Fed Chairman Jerome Powell’s intention to raise interest rates by 50 basis points in June and July, as well as shrink the bank’s balance sheet by about 1 trillion. dollars per year.

At the same time, he did not rule out a move of 75 basis points in the future, while he said that a discussion about the sale of Fed securities supported by mortgages is justified.

He further added that the increase of 50 basis points was “historic” and that he would support “staying at this most aggressive level until we reach neutral ground”.

A neutral stance is considered to neither stimulate nor limit growth. The Fed’s Monetary Policy Committee (FOMC) estimates this level of interest rates at around 2.4%, and is currently in the range of 0.75% to 1%.

Source: Capital

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