Fed’s Bostic Still Backs June Pause While Barkin Won’t Pre-Judge

(Bloomberg) — Federal Reserve Bank of Atlanta President Raphael Bostic is still in the camp who would like to hold interest rates steady next month while his Richmond colleague Thomas Barkin prefers to keep his options open.

“Our policy works with a lag. And we’re just at the very beginning of this time when that lag is starting to play out and you’re starting to see tightness emerge,” Bostic said on Monday. “Right now, absent a big change, I think I will be comfortable saying let’s just look and see how things play out.”

Officials have raised rates 5 percentage points in the past 14 months to curb inflation running more than double their 2% target. Investors currently see odds of around 29% that officials will hike by a quarter point at their June 13-14 meeting, according to pricing in interest-rate futures contracts.

“I’m not going to prejudge June,” Barkin said, noting there was a plausible narrative whereby the Fed’s previous rate hikes, plus tighter credit standards amid strains in the banking sector, will cool demand and prices.

“I’d like to be convinced of that and I’m still looking to be convinced of that,” he said.

The two policymakers took part in a moderated discussion hosted by Barkin’s bank in Richmond focused on the impact of technology that also touched on the Fed’s discount window and questions about deposit insurance.

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