Raphael Bostic, Speech, From Academia to the FOMC, The Journey of One Fed President

Inflation and Restrictive Level

“In short, we must get inflation on a clear trajectory toward 2 percent. The first step toward that outcome is to raise interest rates to a restrictive level sufficient to drive inflation back to our objective. The challenge, of course, is to determine what constitutes sufficiently restrictive given the tremendous uncertainty in US and global economic dynamics.”

Rate Hikes

“If the economy proceeds as I expect, I believe that 75 to 100 basis points of additional tightening will be warranted. As I’ve discussed, it’s clear that more is needed, and I believe this level of the policy rate will be sufficient to rein in inflation over a reasonable time horizon.”

Pace

“In terms of pacing, assuming the economy evolves as I expect in the coming weeks, I would be comfortable starting the move away from 75-basis-point increases at the next meeting.”

“In my view, slowing the pace of rate increases also acknowledges the great uncertainty in our economy. Being more cautious as policy moves deeper into restrictive territory seems prudent.”

Pause

“Once we reach our landing rate, I think it will be appropriate for the Committee to allow some time to pass, during which the FOMC could assess the impact of policy tightening as it transmits through the economy. The challenge here is that policymakers have no way of knowing for certain if the peak rate selected is the optimal one. So, I think we must let the economic dynamics play out.”