The goal of Federal Reserve monetary policy is to get its policy rate up to neutral as quickly as possible, said Atlanta Fed President Raphael Bostic on Monday.
The Fed estimates that a 2.4% fed funds rate is “neutral” meaning it does not boost growth or dampen demand.
Last week, the Fed raised its benchmark rate by 25 basis points to a range of 0.25 – 0.5%.
In a speech to the National Association for Business Economics, Bostick said he sees a total of six quarter-point rate hikes this year and two more in 2024 to get close to neutral.
Bostic said he didn’t think an “extremely aggressive rate path” was the best course of action given the uncertainty facing the economy from the war in Ukraine.
“The elevated levels of uncertainty are front forward in my mind and have tempered my confidence that an extremely aggressive rate path is appropriate today,” Bostic said.
While inflation is not expected to decelerate this spring, as he had previously projected, there is also a risk that demand could falter in face of uncertainty and rate hikes, he said.
If demand weakens, it could “exacerbate an already difficult situation,” he said.
Fed Chairman Jerome Powell will speak at lunchtime to the NABE conference.
Stocks DJIA, +0.80% SPX, +1.17% were set to open lower on Monday. The yield on the 10-year Treasury note TMUBMUSD10Y, 2.237% rose to 2.226%.