MNI BRIEF: Fed's Bostic Says Runoff Will Complement Rate Path

Atlanta Fed President Raphael Bostic Monday said uncertainty emanating from the war in Ukraine has not altered his view to get going soon on reducing the balance sheet at a faster pace than after the financial crisis, a move that will complement the interest rate path.

"Ukraine has not changed my view on that," Bostic told reporters after a speech, also noting he sees growth this year at 2.8% and inflation at 4.1%. The Atlanta Fed president said he does not see inflation falling to 2% "probably not until 2024."

"One of the reasons why I'm relatively conservative in the the slope of the [interest rate] path is because I think that the balance sheet will inform what the speed looks like or what the appropriate speed looks like and as we begin to move that will give us more information about how fast would be appropriate to move later in the year. I stand open," he said, pointing to developments in Ukraine for some flattening of the yield curve. "I do think that reducing the size of the balance sheet will complement the move on interest rates."

While pushing back on the notion that rising interest rates will be a hit to the unemployment rate, Bostic stressed optionality. "I'm going to be very, very open in terms of my approach to figuring out what appropriate policy," he said about 50 basis point moves or pausing hikes.