Bostic hedges: policy not too easy, mind open on next move
While he views monetary policy as not “overly easy,” Federal Reserve Bank of Atlanta President Raphael Bostic said Tuesday his mind is open about further tightening.
“I conclude that monetary policy is not currently overly easy,” Bostic told the Atlanta Press Club, according to prepared text released by the Fed. “But this is not a statement as to whether or not further adjustments in policy are required.”
The Atlanta Fed staff projections show economic strength and progress on inflation later this year and early next. “I think clear evidence of this path could certainly be consistent with an additional rate hike this year,” Bostic said. “As for now, however, I have an open mind on when the next step in the normalization process will be necessary.”
Bostic noted a central bank should be able to reach its inflation objective despite “secular trends that exert downward pressure on the rate of change in consumer prices.”
“Put more directly, if the inflation rate runs below a central bank’s target for an extended period of time, it is difficult for me to conclude that monetary policy is overly easy,” he said.
Given economic circumstances, he said, for most of the past five years the consensus was “monetary policy was not overly easy.” Bostic added, “My inclination is that the stance of monetary policy is not currently too accommodative.”
“I take seriously” the Fed’s continued failure to meet its 2% inflation target, Bostic said.