Atlanta Fed President Eric Bostic said Tuesday that the Fed does not need to raise borrowing costs further and that while the Fed's rate hikes so far have slowed the economy and lowered inflation, he does not foresee a recession ahead.
Bostick told the American Bankers Association that "I actually don't think we need to raise rates any more" to bring inflation down to the Fed's 2 percent target.
He noted that current policy is sufficiently restrictive and that "many" effects of the Fed's rate hikes have yet to be felt. At the same time, he added, there is a lot of momentum in the US economy that could "absorb" some of the impact of policy tightening and slow the economy without slipping into recession.
In addition, Bostic said the conflict between Israel and the Palestinian militant group Hamas that erupted over the weekend has created uncertainty for the U.S. and global economy, noting that it will lead to a rethink of markets and investments.
But he also argued that the past few years have seen many unexpected events, including the coronavirus pandemic and the conflict between Russia and Ukraine, which also means the Fed needs to be "prepared and in action mode" if needed.
Mr Bostic said that if the data diverged from what he expected, "we might have to raise [the Fed policy rate], but that's not my view at the moment and it's not my expectation".
It is understood that Bostic, who does not have a vote on monetary policy this year, has been one of the more dovish members of the Fed's monetary policy stance, and Bostic has advocated stopping interest rate hikes early on. As of last month, most officials believed the Fed would need to raise borrowing costs by another 25 basis points before the end of the year.
But in recent days, some Fed policymakers have appeared to soften that view in light of the rise in long-term Treasury yields, which they believe could help the Fed tighten policy somewhat.