“My baseline is that we should stay at this level for the rest of the year” to assess the impacts of the Federal Reserve’s rate-hiking cycle on the real economy, Atlanta Fed President Raphael Bostic told Yahoo Finance in an interview Wednesday.
“I actually think that we are still at the very early stages of our monetary policy tightening, starting to influence the economy in a significant way. I just feel like we have a little bit of time to just let that play out and see exactly how much the economy is responding to our policy,” he said.
Conversely, Fed boss Jerome Powell made plain earlier in congressional testimony that the central bank is expecting to hike rates further this year to contain price pressures. It may “make sense” for the Fed to raise rates at a “more moderate pace” than it has in the past 15 months, he added.
Bostic, one of the most dovish members of the Fed, said in the interview that it could take six to 24 months for the economy to feel the full effect of the Fed’s monetary tightening, as such policies historically operate with a lag.
Over the past 15 months, the Fed’s rate-setting Federal Open Market Committee jacked up its benchmark rate at a historically aggressive pace to tame the highest inflation in four decades. Progress has been made so far, but consumer prices are still well above the Fed’s objective. Last week, the FOMC left rates unchanged at a target range of 5%-5.25% and signaled that two more rate hikes are on the table for this year.
“I still think we’re kind of still early in the game in terms of seeing our restrictive policies impacts, and I’m very comfortable waiting,” Bostic said.
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Image and article originally from seekingalpha.com. Read the original article here.