Feds Bostic: Inflation still remains too high

• Sees one more rate hike and and then hold
• inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term still remains too high. There is a lot to do on inflation
• I don't see inflation falling below 3 1/2% and 3 1/2 is still well above the 2% target
• Does not have a recession as his baseline outlook
• the economy continues to be extremely resilient
• we will economy that remains strong. We're going to have to see some weakening
• we only moved into restrictive stance starting in the fall
• The banking system seems to be stable but never know when the next shoe may stop
• The uncertainty in the banking is going to cause bankers to be more cautious. That is going to do some work for the Fed in not having to raise rates more
• monitoring situation around debt ceiling. Uncertainty is not helpful
• shorter-term rise inflation expectations doesn't really surprise me. People see prices at gas stations and grocery stores. The longer run inflation expectations have not moved as much.
• We're going to do what we need to do to get inflation back down to 2%
• It is important that we get our balance sheet back down to a size that is appropriate

He is less hawkish vs the likes of Waller and Bullard who see multiple hikes still left to do.

The question will be how the Fed can square policy if inflation decline stalls near 3.5%? Already, it will still take at least 3 months for the YoY to get down to 3.5%, unless shelter starts to show a sharper decline (it rose 0.6% last month and accounts for 34% of the CPI data).

The next 3 months will drop off 0.3%, 1.0% and 1.3% in successive months off of the YoY numbers. That is 2.6% with the current headline at 5%. If the average MoM gain is 0.3%, 5% comes down to 3.5% - the level Bostic sees as the stall point. The problem is the two months after those 3 months, will drop off an unchanged reading and 0.1% gain. If inflation MoM comes in at 0.2% during those two months, that would increase YoY to around 3.8%. The fall stalls. Inflation remains sticky.

To average 2%, prices need to average less than 0.2% MoM. The question is, can that happen? Can there be some negative numbers too? Much will likely depend on the ubiquitous shelter component (and oil too). If it does not start to come in 0.2% or even lower, the inflation coming down to the target will be a hard hurdle.