Fed's Bostic : Interest Rates 'Within Shouting Distance' of Neutral
By Paul Kiernan
ATLANTA--Atlanta Federal Reserve President Raphael Bostic signaled Thursday that the central bank should continue raising interest rates, though he noted growing uncertainty in the economic outlook.
Mr. Bostic, a member of the rate-setting Federal Open Market Committee, said that he continues to see risks that the economy is overheating, notwithstanding recent volatility in financial markets and softening inflation data. Considering strong economic growth in recent quarters, a "very low" unemployment rate and inflation close to the Fed's 2% target, he said interest rates should be set at a "neutral" position that neither spurs nor hinders the economy.
"I currently think we're within shouting distance of neutral, and I do think neutral is where we want to be," Mr. Bostic said, according to his prepared remarks for a speech. "I'm not seeing clear signs of overheating, nor am I seeing any indications of a material weakening in the macroeconomic data at the moment."
Mr. Bostic didn't signal whether he would support a widely expected increase to the Fed's benchmark interest rate at an upcoming meeting this month. Earlier this year, he had suggested he wouldn't.
Given growing uncertainties in the U.S. economy, he said the Fed should adopt an approach to policy that seeks to balance risk.
"For me, the answer is to proceed cautiously, with a keen eye on the data," Mr. Bostic said. "This will particularly be the case over the next six to 12 months, as I look for signals in the data that might confirm or refute my current position."
Write to Paul Kiernan at firstname.lastname@example.org