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Atlanta Fed President Raphael Bostic told Reuters that one 25bps interest rate hike could allow the Federal Reserve to halt its tightening cycle.
Bostic believes they will be able to do so with some confidence that inflation will steadily return to the 2% target. He told the publication in an interview that recent inflation data is “consistent with us moving one more time,” as they have a lot of momentum, suggesting they are on the path to that 2% target.
The Fed is anticipated to raise rates by 25bps at its May 2-3 meeting, while in March, when Fed officials updated their projections, 10 policymakers were in agreement with Bostic.
Bostic believes the aggressive rate hikes over the last year are only now starting to impact the economy, adding that it’s a good reason to pause after one more rate increase in order to assess how the economy and inflation evolve, as well as trying to cap the damage to growth and jobs.
He noted that inflation is still elevated and feels “there’s more to do” and that “the next step is going to be to figure out how much more.”
“I think the point of ‘hit the mark and hold’ is ‘hit the mark and hold,’ unless you see a trend that is unmistakable, that is going in a way that makes you uncomfortable,” Bostic told Reuters, referring to plans to reach a tight enough level of interest rates and leave them unchanged.
Reuters also revealed that Bostic shifted his view after the failure of Silicon Valley Bank and the collapse of Signature Bank soon after.
