Fed’s Bostic sees gradual rate hikes to balance growth, inflation

MONTGOMERY, Ala. (Reuters) – The Federal Reserve should aim to raise interest rates gradually despite weak inflation readings in part because any spike in demand could push the U.S. economy beyond its sustainable levels, one of the newest Fed policymakers said on Tuesday.

Atlanta Fed President Raphael Bostic, who began the job mid-year, said overall economic activity has grown at “a reasonably solid pace” in recent months despite hurricanes that have hit his district.

“I think it will be appropriate for interest rates to rise gradually over the next couple of years,” Bostic, who votes on policy next year, said at an economic forum in Montgomery, Alabama.

Noting that inflation has “softened” this year, he said: “While I’m still holding to the view that the recent weakness largely reflects idiosyncratic noise, I’ll be watching the next few inflation reports closely for signs of a pickup.”

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