Atlanta Fed President Raphael Bostic said in a speech yesterday that the economy is “doing well and standing on its own”. He supported monetary to move towards a neutral stance. And that means “a gradual increase in nominal interest rates over the next handful of quarters.” However, later he clarified that there is still “some uncertainty” to whether US is “really at full employment”. If there is “not a risk of overheating then we have the possibility to be more patient.”
Bostic is taking a “wait and see” approach to the fourth hike in 2018 in December. That is, to several rate hikes in the coming quarters doesn’t mean rate hikes in every quarter. While it may sounds a bit confusing, his comments have been consistent. Bostic is one of those who are more cautiously on the outlook. In particular, just a few weeks ago, he vowed not to vote for anything that knowingly inverts yield curve.
On trade tensions, Bostic said “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.” But he also noted that a recent survey shows trade war fears have had “only a small negative effect on US business investment so far.”