Fed’s Bostic: Could be in position to pause by mid to late summer
|Federal Reserve Bank of Atlanta President Raphael Bostic said on Thursday that the central bank could be in position to pause the current tightening cycle by mid to late summer. He favors a 25 basis points rate hike in March but warned they are “watching” incoming data, that shows high inflation and a strong labor market. He will adjust the rate outlook if data comes in stronger.
According to him, risks are now roughly balanced. He added that a debate is underway at the Fed about how much influence is having the current tightening in the economy. Despite “some attenuation” of inflation, the Fed must remain resolute in controlling inflation. There is still a “long way to go”.
Bostic mentioned that businesses say they are expecting a slowdown in the pace of wage increases but they still plan to hire more workers.
Regarding chances to monetary policy, Bostic argued that slow and steady modifications should reduce the risk of “hard” outcomes. He said it is appropriate to be cautious so the Fed does enough to control inflation, doing no more than what they need to.
Market reaction
Stocks in the US moved higher following Bostic’s comments and the US Dollar pulled back modestly. The Dow Jones is up by 0.85% and the Nasdaq gains 0.32%. The DXY is off highs, hovering around 105.00, consolidating a daily gain of around 0.55%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.