Fed member sees gradual interest rates hikes in short term
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JACKSON, Miss. — Atlanta Federal Reserve Bank President Raphael Bostic said Thursday that he believes growth remains strong despite uncertainty over trade tensions, and he expects interest rates to continue to rise to a point where they neither stimulate nor slow the economy.
“When the economy is doing well and standing on its own, as it is now, I think monetary policy ought to be moving toward a neutral stance,” Bostic said in a speech before the Mississippi Council on Economic Education “For me, this means a gradual increase in nominal interest rates over the next handful of quarters.”
The central banker said he remains concerned about the uncertainty being created by President Donald Trump’s confrontational and protectionist trade policy.
“An uncertain outlook can cause firms to delay investments while they wait to see how the situation unfolds. Such a development could grow to have macroeconomic ramifications the longer the uncertainty remains,” Bostic said. He said a recent survey shows trade war fears have had “only a small negative effect on U.S. business investment so far.” However, Bostic said the uncertainty appears concentrated in the investment-heavy manufacturing sector.
