MNI POLICY: Fed's Bostic: Significant Changes Needed To Act

By Evan Ryser

     NEW YORK (MNI) - The Federal Reserve Bank of Atlanta's President Raphael

Bostic indicated Thursday that he will support an interest rate pause with the

economy and inflation in a good place.

     "Right now, I think the changes that need to happen in the economy for me

to feel like we are running too hot would be significant. At the same time, very

similarly, the changes to suggest we are running significantly below my long-run

average, that is going to be significant as well," Bostic said to reporters in

New York City.

     "I am of the view that we should let the data tell us what the appropriate

action is," Bostic said. 

     "If the data tells us the economy is moving in a way that is diverging

significantly below our estimate of long-run average should be, then we should

cut," Bostic added. "If we get evidence that the economy is running too hot and

risks are emerging then we should increase."

     --DISSENT

     Bostic revealed that he "probably" would have dissented at the October FOMC

meeting had he been able to vote.

     Bostic said "the inflation picture is actually fairly healthy," and while

inflation expectations are of "concern" the Fed as a body will need to come to

an understanding about how much inflation it can accept.

     If we went to 2.2% and we stayed there "for a while," Bostic said, "then

that would not trouble me."

     "I think we need to have a debate about inflation," Bostic said in a

moderated discussion with the Money Marketeers of New York University.

     The Atlanta Fed head said the Fed faces difficult decisions moving forward.

     "It is a very difficult time and it is something we will continue to

wrestle with," Bostic said noting risks to the outlook and the Fed's changing

posture in 2019.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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