Federal Reserve Bank of Atlanta President and CEO Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland, Feb.
Clodagh Kilcoyne | Reuters
The Federal Reserve is not ruling out raising interest rates by half a percent instead of the typical quarter-point move if inflation remains elevated, the Atlanta Fed chairman said, Raphael Bostic, in an interview with the Financial Times.
Bostic reiterated to the media his call for three-quarter point interest rate increases in 2022, starting in March. But he did not rule out that a more aggressive approach is possible if the data changes.
“If the data indicates that things have moved in such a way that a 50 basis point move is necessary or [would] be appropriate, so I’ll look into that. . . If moving to successive meetings makes sense, I’ll be comfortable with that,” Bostic said in the interview.
Bostic said he would watch for a deceleration in monthly consumer price gains and whether higher wages drive prices up significantly, according to the Financial Times.
After more aggressive inflation-fighting comments from Fed Chairman Jerome Powell last week, the market now expects the central bank to raise rates at least five times this year, up from four times previously. , according to Federal Funds Futures.
These hikes are generally believed to come in quarter-point increments, although some in the market, including Bill Ackman, believe a half-point hike is needed to get inflation under control because the Fed lags behind the curve. The Fed last raised rates by half a point in May 2000.
Bostic dismissed the idea that the Fed would raise rates too aggressively or too damagingly, according to the report.
“Our political path is not a path of restriction. It is a less accommodating path,” he told the newspaper. “If we do all three [interest rate increases] I have in mind, that will always leave our politics in a very accommodating space.”
Read the full Financial Times report here.