Atlanta Fed President Raphael Bostic said that at the December meeting that he was ready for a smaller rate hike.
Atlanta Fed President Bostic said at next month’s meeting that there might be a minor increase rather than a 75 basis point increase. Despite this, Bostic argued that there should be an increase of 100 basis points to fight inflation.
Speaking at an event on Saturday, Bostic said, “I am far from the idea of a 75 basis point increase at the December meeting. If the economy moves in the direction I expect, an overall increase of 75 or 100 basis points may be required. I believe that interest rates at this rate will be sufficient to reduce inflation in a reasonable time.
As Bostic stated, if another 100 basis points increase, the policy rate will rise to 4.75-5 percent.
Bostic noted that after a while, the Fed should pause and watch how the economic dynamics evolve. He stated that it might take between 12 and 24 months for the full effect of the rate hike to be felt.
Many Fed officials had signaled that there could be a 50 basis point increase in the December meeting after increasing interest rates by 75 basis points in four sessions in a row.