Fed’s Bostic tells FT central bank could hike rates half a point if needed

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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.

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