Atlanta Fed president Bostic


Atlanta Fed president Bostic is on the wires saying that:

  • We have seen a pretty robust recovery and employment/GDP
  • In early stages on omicron assessment on the economy
  • Some analysis from Fed board suggests successive waves of the virus has led to milder slow down each time
  • If that happens again, I think the US economy will grow despite new variants
  • Uncertainty on inflation has ability to prolong inflation environment for longer
  • Long we have higher inflation the greater the risks
  • we do need to be tapering bond purchases, have served the purpose
  • tapering will provide more optionality in 2022 on interest rate real lift off
  • My last September forecast saw one hike for 2022 (who did comment recently that could see two)
  • If inflation stays elevated in 2022, there will be good case for pulling forward interest rate hikes and doing more than one hike next year
  • It would be good for the Fed to taper before raising interest rates
  • Says he will be in favor of getting the taper over with sooner rather than later
  • Getting rid of tapering before the end of the first quarter is in the Fed's interest
  • Fed can lead data inform policy once a taper is out of the way
  • Taper will not put brakes on the economy, just removing some stimulus
  • Wants to see continued momentum in job gains in monthly report
  • We are open to possibility that maximum employment might be fewer jobs than before
  • Interest rate path is to go slow and steady, get two neutral rate in late 2024 and early 2025
  • I'm hopeful that as the Fed moves policy, some tensions in the economy will dissipate
  • If it doesn't happen, but will have to take more strident steps
  • It would be appropriate for the Fed to reduce its balance sheet
  • Will be watching omicron carefully
  • There is a lot of potential risk for the economy

Bostic is a voting member on the FOMC in 2021. So he will have a say on whether the Fed should increase the taper at the December meeting. His comments about getting the taper over sooner rather than later suggests the speeding above that taper process.