Fed’s Bostic: Fully appropriate to move policy closer to neutral, but cautiously

Atlanta Fed President Raphael Bostic said on Thursday that while it is fully appropriate that the Fed move policy closer to a neutral position, it should do so in a cautious way.

It’s going to take longer than initially thought for supply chain issues to resolve, he added, noting that the Fed’s goal is to try to have sustained growth that extends for as long as possible.

Bostic is on the dovish end of the Fed spectrum nowadays, as demonstrated by his emphasis on getting rates “closer” to neutral in a “cautious” way (rather than other Fed members who want to actually get to neutral or above it in a more rapid way). Markets did not react to his comments.

As expectations rise that the Federal Reserve will step up its efforts to contain inflation with bigger interest rate hikes, Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic on Thursday provided a somewhat dovish counterpoint.

“It’s time that we get off of our emergency stance — I think it’s really appropriate that we move our policy closer to a neutral position — but I think we need to do it in a measured way,” Bostic told a Chicago Fed virtual conference on economic mobility.

Evans said: “I’m optimistic that we can get to neutral look around and find that we’re not necessarily that far from where we need to go”.