Fed Bostic: Inflation at 4.1% by the end of the year and GDP growth at 2.8%

Bostic, President of the Atlanta Fed
  • Balance sheet reductions will inform the appropriate pace of increases
  • Its baseline suggests they won’t need to raise rates above neutral
  • Haven’t set appropriate pace for balance sheet runoff, but expect scale symmetry from last
  • Comfortable with more aggressive rate hikes if the data indicates it’s appropriate

The balance sheet issue is the short-term one, but I think the market will look at the debate above neutrality. The long end of the curve is terminal rate pricing and if we don’t get above around 2.25%, the economy will have plenty of life in the years to come.


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