May 15 - Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said Monday he does not expect any interest-rate cuts this year because inflation is likely to be stickier than those in markets believe, and if anything "we may have to go up".
"The appropriate policy is really just to wait and see how much the economy slows from the policy actions that we've had," Bostic told CNBC, noting that for months he has believed the Fed would need to get short-term interest rates to the 5%-5.25% range where they are currently.
There has been "definitely been" progress on inflation, he said, calling the most recent reading of the consumer price index, up 4.9% from year earlier versus 5% a month before, "encouraging."
"I think in the next several months the math is going to work in our favor, and the economy is going to work in our favor," Bostic told CNBC.
Still, he said, "if there is going to be a bias to action, for me there would be a bias to increase a little further, as opposed to cut," Bostic said.
After the Fed's most recent interest-rate hike in early May, Fed Chair Jerome Powell signaled the central bank may pause to assess how its rapid rate hikes so far are affecting the economy.
The unemployment rate, at 3.4%, is the lowest it has been in more than 50 years. Even with some increase to that as inflation comes down, Bostic said, the economy would still be very strong.
Recession is not in his baseline forecast, but if one occurs, he said: "I think it's not going to be very long, I think it's not going to be very deep."
