Fed's Bostic expresses caution about the pace of interest rate hikes

cnbc.com:

Atlanta Federal Reserve President Raphael Bostic on Tuesday expressed concern about the impact that rate hikes could have on the U.S. economic recovery, saying the central bank shouldn't move so fast that it chokes off growth.

Bostic did not commit in a CNBC interview to what pace the Fed should take in increasing benchmark rates. Instead, he said policymakers should be measured in their approach and watch how what they do impacts conditions.

«I think I'm in the same areas as my colleagues philosophically,» he told CNBC's Sara Eisen in a "Closing Bell" interview. «I think it's really important that we get to neutral and do that in an expeditious way.»

«Neutral» is considered the rate at which the economy is running on its own with rates that are neither boosting nor restricting growth. Bostic said that rate could be as low as 1.75%. That puts him near the median of the Fed's «dot plot» of individual members' projections released each quarter.

«I really have us looking at one and three-quarters by the end of the year, but it could be slower depending on how the economy evolves and we do see greater weakening than I'm seeing in my baseline model,» he said. «This is one reason why I'm reluctant to really declare that we want to go a long way beyond our neutral place, because that may be more hikes than are warranted given sort of the economic environment.»

That puts him in contrast with some of the other Federal Open Market Committee members.

On Monday, St. Louis President James Bullard said he sees the fed funds rate, which serves as a benchmark for many consumer debt instruments, rising to 3.5%. He said the Fed needs to go beyond neutral if it has hopes of taming inflation running at its fastest pace in more than 40