Fed’s Bostic: Current policy rate sufficient to curb inflation

Atlanta Fed President Raphael Bostic made a clear stance today, expressing confidence in the prevailing policy rate’s ability to bring inflation down to the desired 2% mark. In his words, “I think that our policy rate is at a sufficiently restrictive position to get inflation down to 2%.” Contrary to some speculations about further hikes, he stated, “I actually don’t think we need to increase rates anymore.”

Bostic’s comments come at a crucial juncture when the market is closely monitoring the bond market dynamics, especially recent sharp rise in Treasury yields. Responding to queries about the possible impact of rising Treasury yields on the Fed’s policy approach, Bostic highlighted that the present rates are “clearly” on the restrictive side, hinting at a visible slowdown in economic activities. He also hinted at more repercussions from the Fed’s past hikes that might manifest in the near future.

In addition to domestic economic indicators, Bostic also touched upon the geopolitical developments, particularly the recent violent episodes in Israel. Recognizing the potential of such geopolitical events to infuse further uncertainty in the global economic landscape, Bostic underscored the need for the Federal Reserve to remain agile. He emphasized the importance of being nimble and ready to adapt in light of rapidly evolving global scenarios.