Fed's Bostic says 25 or 50bps is on the table in September if inflation is too high, reiterates he is comfortable with 50bps hikes at the next couple of meetings and he is open to moving more aggressively if inflation is higher

• However, it may make sense to pause in September depending on the economy.


• Analysts have a wide range of views about the path of the economy, providing one source of volatility. 


• There is a lot of momentum in the economy with growth above trend in the high 2s this year, even with expected rate hikes. 


• Expects inflation still in high 3% range this year. 


• Reiterates he agrees with 50bps hikes at next couple of meetings, and would aim for a 1-2.5% federal funds rate by year-end. 


• Seeing some reaction to policy already in the real economy, however it needs to be broader. 


• It is possible more of the impact of monetary policy could come through wealth effects and equities this time. 


• Challenge for the Fed now is to determine when supply and demand are reaching equilibrium and not overdo rate hikes.

Analysis details (19:04)

• Bostic has previously said he is comfortable with 50bps moves at the next two-three meetings, and has said that then the Fed could take a pause to assess how the economy is reacting to the policy normalisation.

23 May 2022 - 19:01- Fixed IncomeImportant- Source: Newswires