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Fed’s Bostic Sees No Overheating And No Reason To Raise Rates

Fed’s Bostic Sees No Overheating And No Reason To Raise Rates

Written by Dana Sanchez

Jan 16, 2020

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Bostic
Raphael Bostic, president of the Atlanta Federal Reserve bank, is upbeat about the economy heading into an election year. He said it’s performing above expectations, no recession in sight, and no appetite to raise rates. Bostic is pictured in 2007 when he was an associate professor at the University of Southern California School of Policy, Planning and Development (AP Photo/Rich Pedroncelli) The Federal Reserve Building in Washington, D.C., July 31, 2019. (AP Photo/Patrick Semansky)

Atlanta Federal Reserve bank President Raphael Bostic was optimistic this week about the U.S. economy, saying it’s performing above expectations with no recession in sight, and suggesting no desire to change interest rates.

“The economy is doing fine,” Bostic told the Rotary Club in Atlanta. “There is not a lot we have to do to really to stimulate or slow” the economic momentum, he said according to a Bloomberg report.

Bostic said he didn’t see anything suggesting a deep contraction. What worries him, he said, is “the persistence of uncertainty.”

If trade uncertainties don’t get resolved, it could lead to “wholesale retrenchment.” Bostic said.

If businesses start “approaching their business differently” or if consumers stop spending, that would cause the Fed to make a “material reassessment” of its outlook, Bostic suggested.

After three straight rate cuts, Fed officials at their meeting in December signaled they expect to hold policy steady and sideline the central bank through 2020 the presidential election year.

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Eric Rosengren, President of the Boston Federal Reserve bank, also says he’s positive about the economy. Rosengren is one of the few Fed officials biased towards raising rates, while Bostic is more centrist, Yahoo Finance reported.

An asset bubble and a surge in inflation are the risks most worrying to Rosengren. More so than threats from trade disputes and sluggish global growth, he said, according to prepared text of his remarks released by the Fed.

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