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Fed's Bostic says he remains open to faster taper and one or two rate hikes in 2022

EconomyNov 26, 2021 08:11PM ET
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© Reuters. FILE PHOTO: President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland February 13, 2019. REUTERS/Clodagh Kilcoyne

By Jonnelle Marte

(Reuters) - Atlanta Federal Reserve President Raphael Bostic said on Friday he is hopeful that the momentum of the U.S. economy will carry it through the next wave of the coronavirus pandemic, and said he remains open to accelerating the pace of the central bank's bond taper.

Earlier on Friday, the World Health Organization said it was designating the new Omicron variant, first identified in South Africa, as being "of concern."

If the new Omicron coronavirus variant follows the pattern seen with previous variants, it should cause less of an economic slowdown than the Delta variant, Bostic said.

"We have a lot of momentum in the economy right now," Bostic said during an interview with Fox News, citing strong jobs growth. "And that momentum, I'm hopeful, will be able to carry us through this next wave, however it turns out."

Bostic reiterated that he is open to speeding up the pace at which the central bank slows down its asset purchases so officials can have greater flexibility to respond to surging inflation.

It could be "reasonable," Bostic said, for the Fed to potentially conclude its asset purchases by the end of the first quarter next year, or early in the second quarter, if the economy continues on the same trajectory. At the current pace, Fed officials would be done tapering purchases by the middle of next year. Policymakers will meet again on Dec. 14-15.

The news of the Omicron variant spurred investors to lower their expectations on Friday for how quickly the Fed and other central banks may raise interest rates next year.

According to CME's FedWatch tool, money market traders were pricing in a 53.7% chance of at least one rate hike by the Federal Open Market Committee's June meeting as of Friday afternoon, down from an 82.1% chance on Wednesday.

Bostic said on Friday that he has not ruled out any possible actions and said it is "certainly possible" for the Fed to raise interest rates at least twice next year if inflation remains elevated.

"We're not going to let inflation get out of control," Bostic said.

Fed's Bostic says he remains open to faster taper and one or two rate hikes in 2022
 

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Comments (3)
Larry Langley
Larry Langley Nov 26, 2021 10:17PM ET
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He's always doing interviews on his own knows it manipulates the markets. Wonder what his financial interest is like the other Fed members were that had $ involved.These are the same people that cut the rates 3 to 5 times before we had the pandemic that fueled the market.Why's he on Fox, this isn't his job. He needs to resign and same with the others that like to go on solo interviews.It doesn't help the markets or general economy.This is as wrong as letting banks decide to grade stocks. They screwed us into last crash, good idea. Create a grade system and put those that can't manage or gain from it know charge of herding the sheep.
Edward Chong
Edward Chong Nov 26, 2021 10:17PM ET
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debt is too huge to service a 50 basis points hike next year.
David Stocks
David Stocks Nov 26, 2021 8:56PM ET
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just give it 5 minutes Greenspan junior. there's a new variant we need to check out first
Nysom Nysom
Nysom Nysom Nov 26, 2021 5:12PM ET
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stop printing and we'll see how much momentum we have
Marcus LL
Marcus LL Nov 26, 2021 5:12PM ET
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They'll stop by next summer.  Are you saying the stock market will stop rising after that?  What did the stock market do from 2014-2019 after the Fed stopped printing?
 
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