Fed official signals 'small increase'

Atlanta Fed President Raphael Bostic said he was ready for a smaller rate hike this time at the December meeting. Atlanta Fed President Bostic indicated that instead of a 75 basis point increase, a smaller amount could be made at next month’s meeting. Despite this, Bostic argued that a total of 100 basis points should be increased to combat inflation. Speaking at an event on Saturday, Bostic said, “I am far from the idea of a 75 basis point increase at the December meeting. If the economy progresses in the direction I expect, a total increase of 75 or 100 basis points may be necessary. I believe that interest rates at this rate will be sufficient to reduce inflation in a reasonable time.” As Bostic stated, if interest rates are increased by another 100 basis points, the policy rate will rise to the 4.75-5 percent range. Bostic noted that the Fed will need to pause for a while and watch how economic dynamics evolve. He stated that it could take between 12 and 24 months for the full impact of the rate hike to be felt. Many Fed officials had signaled that there could be a 50 basis point increase at the December meeting, following four consecutive 75 basis point rate hikes.