Raphael Bostic, Interview: CNBC

Fed Funds

Interview Question: Are you still thinking one and done when it comes to a May interest rate increase?

“One, for sure, that’s my baseline for this year. I’ve been at this point for quite some time. The economy still has a lot of momentum and is performing quite strongly and inflation remains too high. Before I came down to the studio here, I took a look at our underlying inflation dashboard and by pretty much every measure that you look at, current inflation is more than double what our target is. So there’s still more work to be done and I’m ready to do it.”

After May? “My baseline is to hold. I think that after the next move, if the data come in as I expect, we will be able to hold there for quite some time.  Now, I’ve been saying for a while, I don’t think that inflation is going to come down quickly. It’s going to take some effort and a resoluteness on our part. So once we get to that point, I don’t have us really doing anything but monitoring the economy for the rest of this year and into 2024.”

Inflation

“Part of this is really about the pace of inflations returning back to our 2% target. I don’t think that’s going to happen as quickly as some of the markets do, and it seems that the question is who’s right on this? … I don’t see it coming down below maybe three and a half. And three and a half is still well above our 2% target.”

Recession

“Look, throughout this entire pandemic experience in the last two or three years, the economy has continued to be extremely resilient and it’s continued to perform better than pretty much everyone expected … Part of the challenge we have right now is that we have an economy that aggregate demand is extremely strong and we’re going to have to see some weakening, but we just have not seen weakening happen at very large increments.”