Fed/Bostic: There should be a break after the rate hike

The Fed is likely to raise interest rates by another month and keep them steady for a long time, Atlanta Fed President Raphael Bostic said. He said he favors raising rates one more time and then keeping them above 5% for a while to get inflation, which is still very high, under control. “There’s a lot of work to be done and I’m prepared to do that,” Bostic said in an interview with CNBC on Tuesday. Bostic added that after the next move, “if the data comes in as I expect, we could hold there for quite a while.” Fed officials are expected to raise rates by 25 basis points to 5% from the current 4.75% when they meet on May 2-3. They could also signal a pause as they watch for evidence that price pressures are abating. But St. Louis Fed President James Bullard, one of the more hawkish policymakers, also told Reuters he favors taking interest rates to a range of 5.5% to 5.75%. “Wall Street is very committed to the idea that there will be a recession in six months, but you can’t really read that into an expansion like that. Labor market strength has lifted consumption this year,” Bullard said. Neither Bostic nor Bullard will vote on monetary policy this year. Bostic said the risks of the U.S. economy slipping into recession and recent banking tensions creating damaging headwinds to growth are unlikely.