Fed’s Bostic, Encouraged by Jobs Data, Still Opposes Further Rate Hikes

By Michael S. Derby

NEW YORK – Raphael Bostic, President of the Federal Reserve Bank of Atlanta, commented on the recent jobs data released, indicating that the economy’s current trajectory suggests that additional interest rate increases may not be necessary.

In an interview on Bloomberg, Bostic expressed, "My outlook is that we are going to stay on that slow and steady growth path, and if that trend continues, the current rates will likely be restrictive enough to achieve our 2% inflation target."

However, he acknowledged that significant developments are expected leading up to the next Federal Reserve meeting. "We will receive several employment reports and inflation readings that will provide us with more insights into the economic landscape," he added.

Bostic spoke shortly after the release of October hiring data, which revealed that the economy added 150,000 new jobs, accompanied by a slight increase in the unemployment rate from 3.8% to 3.9%. Wage growth has also shown signs of moderation.

Earlier this week, the Federal Reserve maintained its short-term interest rate target at 5.25% to 5.5%, a level that has been unchanged since late July. While the Fed retains the option to adjust rates, most investors do not anticipate a change, especially in light of the recent employment report.

Regarding the hiring data, Bostic expressed satisfaction with the figures, stating that they align with his expectations and indicate that Fed policies are effectively influencing the economy to achieve the 2% inflation target with minimal disruption.

Bostic also noted that he does not foresee a recession based on his current outlook. He anticipates that inflation pressures may approach the target in the latter half of next year. While he did not specify when interest rate cuts might be necessary, he indicated that as the economy nears the target, the Fed would consider adjusting its policy stance, although that decision is still some time away.