ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
Featured Posts
    • Companies
    London’s ‘magic circle’ law firms make renewed bid to crack US
    • August 9, 2022
    • Markets
    Fed help isn’t coming | Financial Times
    • August 9, 2022
    • Latest News
    News Corp profits almost double as subscriptions drive post-pandemic recovery
    • August 9, 2022
    • Companies
    FirstFT: Rishi Sunak promises to ease cost of living crisis
    • August 9, 2022
    • Latest News
    Investors divided over how long Big Tech rally will last
    • August 9, 2022
Featured Categories
Belarussia
View Posts
Companies
View Posts
Energy
View Posts
Environment
View Posts
Food
View Posts
Governance
View Posts
Health
View Posts
Investors
View Posts
Latest News
View Posts
Markets
View Posts
Potash
View Posts
Regulators
View Posts
Russsia
View Posts
Social
View Posts
Supply Chain
View Posts
Sustainable Finance
View Posts
Technology
View Posts
Uncategorized
View Posts
ESG Telegraph ESG Telegraph
7K
9K
4K
1K
ESG Telegraph ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
  • Latest News

Fed could use half-point rate rises if needed, says official

  • January 30, 2022
  • Staff
Total
0
Shares
0
0
0

The Fed could supersize a rate increase to half a percentage point if inflation remains stubbornly high, a leading US central bank official said.

Raphael Bostic, president of the Fed’s Atlanta branch, stuck to his call for three quarter-point interest rate increases in 2022, with the first coming in March, in an interview with the Financial Times. But he said a more aggressive approach was possible if warranted by the economic data.

That could mean rate rises at each of the seven remaining policy meetings in 2022, or even the possibility of the Fed increasing the federal funds rate by half a percentage point, double its typical amount and a tool it has not used in roughly two decades.

“Every option is on the table for every meeting,” Bostic said on Friday. “If the data say that things have evolved in a way that a 50 basis point move is required or [would] be appropriate, then I’m going to lean into that . . . If moving in successive meetings makes sense, I’ll be comfortable with that.

“I do think that a view has emerged that we have some meetings that we really just dial it in and that there’s no ability of action at, and that’s just never been my mindset.”

He added that he would be watching closely for a deceleration in monthly consumer price gains and further evidence that rising wages are not feeding meaningfully into higher inflation when thinking about his forecast for interest rates. He said he was encouraged by the latest employment cost index (ECI) report, which was published on Friday and tracks wages and benefits paid out by US employers, and expects a moderation in wage growth going forward.

Bostic’s comments echo those of Jay Powell, chair of the central bank, who refused this week to rule out even the most forceful policy responses to quell inflation, which is running at the fastest pace in roughly 40 years.

Powell instead said the Fed would be “humble and nimble” as it looks to “move steadily away from” the ultra-easy monetary policy it put in place in early 2020 to shield the economy from the Covid-19 shock.

Market expectations have shifted as a result, with traders now pricing in one more quarter-point interest rate increase this year, for a total of five.

The Fed’s embrace of a much more hawkish stance has rattled global financial markets, leading to extreme volatility this month and steep losses for US stocks.

The Atlanta Fed chief expressed little concern about the recent gyrations, and said it was a natural response to a Fed that was beginning to withdraw its support.

“The reduction of accommodation should translate into tighter financial markets,” Bostic said. “The developments that we’ve seen on that front are comforting in the sense that markets are still functioning the way they’re supposed to, and they are responding to conditions in ways that are rational and appropriate.”

He said, however, that he was closely monitoring overnight borrowing markets, in particular, for signs of stress akin to the episode in 2018 when financial markets seized up as the Fed tightened monetary policy further despite fears of a growth slowdown.

Bostic, who also supports the Fed reducing its $9tn balance sheet “as quickly as” possible without impairing market functioning, said he was “optimistic” about how the economy was going to perform in the coming months, despite elevated inflation.

He also rejected claims that the Fed would raise interest rates far too aggressively and in a manner that would prove damaging.

“Our policy path is not a constriction path. It’s a less accommodative path,” he said. “If we do the three [interest rate increases] that I have in mind, that’ll still leave our policy in a very accommodative space.

“I don’t think there’s going to be a lot of constraint on growth as we remove these emergency actions.”

Total
0
Shares
Share 0
Tweet 0
Pin it 0
You May Also Like
Read More
  • Latest News

News Corp profits almost double as subscriptions drive post-pandemic recovery

  • Staff
  • August 9, 2022
Read More
  • Latest News

Investors divided over how long Big Tech rally will last

  • Staff
  • August 9, 2022
Read More
  • Latest News

Tech sector tax windfall shores up Ireland’s economy against recession

  • Staff
  • August 9, 2022
Read More
  • Latest News

Embattled Trump fans dig in at Michigan county fair

  • Staff
  • August 9, 2022
Read More
  • Latest News

Demography is not destiny | Financial Times

  • Staff
  • August 9, 2022
Read More
  • Latest News

Xi Jinping grasps ‘knife’ of internal security to complete grip on power

  • Staff
  • August 9, 2022
Read More
  • Latest News

Trump says FBI agents have raided his Mar-a-Lago residence

  • Staff
  • August 9, 2022
Read More
  • Latest News

Live news updates: Russia to suspend inspections of its nuclear weapons under treaty with US

  • Staff
  • August 8, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Featured Posts
  • 1
    London’s ‘magic circle’ law firms make renewed bid to crack US
    • August 9, 2022
  • 2
    Fed help isn’t coming | Financial Times
    • August 9, 2022
  • 3
    News Corp profits almost double as subscriptions drive post-pandemic recovery
    • August 9, 2022
  • 4
    FirstFT: Rishi Sunak promises to ease cost of living crisis
    • August 9, 2022
  • 5
    Investors divided over how long Big Tech rally will last
    • August 9, 2022
Recent Posts
  • First single-bond ETFs look set to revolutionise access to Treasuries
    • August 9, 2022
  • Tech sector tax windfall shores up Ireland’s economy against recession
    • August 9, 2022
  • We must regulate the exploitation of limited resources in space
    • August 9, 2022

Sign Up for Our Newsletters

Subscribe now to our newsletter

ESG Telegraph
  • Home
  • Privacy Policy
  • Guest Post
  • Contact

Input your search keywords and press Enter.