Fed’s Bostic, cheered by jobs data, still leans against further rate hikes

By Michael S. Derby

NEW YORK (Reuters) -Federal Reserve Bank of Atlanta President Raphael Bostic, weighing in after the release of the latest round of jobs data, said on Friday that the economy’s current path appears to indicate that further interest rate increases will not be required.

“My outlook is that we are going to stay on that slow and steady (growth path) and if we continue to do that, then I think where we are now will be sufficiently restrictive to get us to the 2% level for inflation,” Bostic said in an interview on Bloomberg’s television channel.

Even so, he said, “there’s still a lot that’s going to happen between now and even the next meeting. We’re going to get a couple of jobs numbers, we’re going to get a couple of readings for inflation, and that’ll tell us and give us more signals as to what’s going on in the economy.”

Bostic talked to the television channel following the release earlier in the day of hiring data for October that showed the economy added 150,000 new jobs amid a small uptick in the unemployment rate to 3.9% from 3.8% the prior month. Wage gains also moderated.

The jobs report came after the Fed earlier this week held its short-term interest rate target at the 5.25% to 5.5% level it has been at since late July. The Fed preserved the option to raise rates further but most investors believe it won’t, and the jobs data helped bolster the case for no further action.

When it came to the hiring news, Bostic said “I’m pleased with where the number came in,” noting it is at a level “that is consistent with what my outlook has been, and it really tells me that our policies are really starting to work through the economy in a way that can help us get to our 2% target for inflation with minimal pain.”

Bostic said he is not looking for the U.S. to have a recession as part of his current forecast.

The official also said that he expects to see inflation pressures close to the 2% arriving some time in the latter half of next year. And while he didn’t say when the Fed would need to cut rates, Bostic said “as we get closer and closer to our target, we’re going to have to think about moderating the level of our policy stance. But that’s down the road.”