Atlanta Federal Reserve President Raphael Bostic said Friday he supports another large 0.75 percentage point interest rate hike at the FOMC meeting later this month given the momentum in the labor market.
“I’m fully supportive of moving 75 basis points,” Bostic said, during an interview on CNBC.
“The tremendous momentum in the economy suggests to me that we can move 75 basis points at the next meeting and not see a lot of protracted damage to the broader economy,” Bostic said.
See: U.S. creates 372,000 jobs in June with strong labor market seen as bulwark against recession
The Fed hiked its benchmark rate by 0.75 percentage points last month – the largest rate hike since 1994, pushing the rate to a range of 1.5%-1.75%.
Bostic said he thinks the Fed needs to get rates up to 3% this year, not as high as the 3.5% rate supported by some of his colleagues.
“I’ve been on the soft of low side of this all along. There is still a chance that the economy can respond more strongly to our actions such that we won’t have to go as far as we might otherwise,” Bostic said.
The Atlanta Fed president said there are “minor signs” of a welcome slowing in the economy.
If the Fed wants to get inflation under control, the Fed is going have to see supply and demand in the economy get into better balance, he said.
Bostic is not a voting member of the Fed’s interest-rate committee this year.
Many Fed officials have backed a 75 basis point move at the Fed’s July 26-27 meeting. Yesterday, St. Louis Fed President James Bullard and Fed Governor Christopher Waller backed the large move.
Fed watchers said the strong June jobs data gave the Fed the green light to move another 0.75 percentage points.
“I think they are going to go 75 [bp]. There is nothing in this report that would slow them down from that,” said former Fed Governor Randall Krozner in an interview on Bloomberg.
Stocks
DJIA,
SPX,
opened lower on Friday in the wake of the strong job data. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.06%.