The Fed: Fed’s Bostic favors one more interest-rate hike in 2018

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Senior economics reporter

Atlanta Fed President Raphael Bostic

Atlanta Fed President Raphael Bostic said Friday he favors one more interest-rate hike this year, given current economic conditions.

“I favor one more move as things currently stand,” Bostic said during a talk at the Northern Chapter Virginia Society of Certified Public Accountants in Falls Church, Va.

The Fed has raised interest rates twice this year, to a range of 1.75% -2% and a slim majority on the central bank favors two more moves in 2018.

Read: Fed’s Harker says he still favors only one more interest-rate hike this year

Bostic said he was open minded and if the economy looks a lot stronger, he may join the majority.

“I may be okay with four” moves this year if the economy dictates that stance, he said for emphasis.

Bostic said there was no one indicator he was watching that would cause him to favor a faster pace of rate hikes.

There is “no hard trigger,” he said. Rather, Bostic said he would try to gauge a “sense of the momentum” in the economy.

Bostic said it is too early to tell how the trade disputes and tariffs are impacting the economy.

He said a lot of business people he talks to are “nervous” about trade.

“Nobody knows where this ends up,” he said.

“We’re in a dynamic setting. We’re going to just watch and pay attention” to how businesses and consumers react, he said. “We will respond to how the economy responds to the tariffs.”

Opinion: Surprised by how little Trump’s trade war matters to the economy? Just you wait

Bostic said he is paying close attention to the flattening of the so-called yield curve, which has raised fears about the health of the economy, since an inverted curve is often a leading indicator of a recession.

Read: 5 key ways Wall Street and economists think about the yield curve

Bostic said it doesn’t matter if he believes an inverted yield curve is an accurate predictor of a recession, because the market does.

“As we get close to inversion, we have to worry about this, just for that reason,” he said.

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