MNI: Fed Could Dial Back From 75bp If Prices Slow -Bostic

If economic data start to show a clear slowing in inflation, it might give the Federal Reserve room to slow the pace of hikes from supersized 75 basis point moves, Atlanta Fed President Raphael Bostic said Tuesday.

Most Fed officials have yet to clearly endorse either a 50 basis point hike or 75 at the September meeting, but some are offering more explanation of their reaction function. Futures markets are currently pricing in a 75% chance of a third 75 basis point move. (See: MNI INTERVIEW: Fed's Harker Wants Rates Above 3.4% By Year-End)

"Even though it will take time to see the full effect of the policy adjustments we have made to date, I don’t think we are done tightening," he said in a message published on the Atlanta Fed's website. "Inflation remains too high, and our policy stance will need to move into restrictive territory if inflation is to come down expeditiously."

"That said, incoming data — if they clearly show that inflation has begun slowing — might give us reason to dial back from the hikes of 75 basis points that the Committee implemented in recent meetings. We will have to see how those data come in," said Bostic, who is not a FOMC voter this year, noting that this summer’s data showed "glimmers" of good news on the fight against inflation.