Wall Street: Bostic (Fed) more flexible on rate hikes

(Boursier.com) — Atlanta Fed President Raphael Bostic (non-voting member) is the latest Fed official to advocate a slower pace of rate hikes at the December FOMC meeting. If the economy behaves as he expects, an additional 75 to 100 basis points of rate hikes would be warranted to contain inflation. This would imply a maximum rate range of 4.75-5%, below the 5-5.25% peak targeted by some strategists and other Fed members like James Bullard (St. Louis Fed). Bostic added that the Fed doesn’t need to keep ‘tightening’ until inflation falls back to 2%. Instead, it foresees an extended pause once rates reach a sufficiently restrictive level. As Fed officials continued to push the “higher for longer” rate narrative, following weaker-than-expected October inflation numbers, there was also growing traction behind the narrative. of the “peak of the Fed”, as policymakers cite the need to assess lagged impacts…

Thursday’s comments from Bullard also caught the eye. The official notes that based on a Taylor rule approach, a restrictive level of rates could be in the range of 5-7%. Although this was deemed hawkish, the minimum range of 5-5.25% he spoke of remains in line with current market expectations. Finally, Deutsche Bank meanwhile pointed out that Vice President Lael Brainard’s comments last week did not explicitly link a reduction in the pace of tightening to a higher terminal rate.