- Solid US economy can handle rising rates
- last week's job reports points to a solid US economy with little sign of a recession on the horizon.
- Financial markets are flashing signs that an economic downturn could arrive sometime next year
- now we have lots of inflation, but the question is can we get inflation back to 2% without disrupting the economy
- does not seem the US has contracted over the first two months of the year
- Still supports a 75 basis point hike at the July meeting
- higher rates limit the ability of consumers and businesses to borrow and spend which can cool growth and inflation, but they also carry the risk of tipping the economy into a downturn
- other measures of the economy, such as broad measures of workers and business incomes, suggests the economy likely expanded in the 1st 6 months of this year
- businesses added 2.7 million jobs during that time, a robust total that reflects an optimistic outlook among businesses
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Fed's Bostic is also supported a 75 basis point hike. The Fed of central tendency implies an end of year rate of 3.4%. The current rate is at 1.5% to 1.75%. A 75 basis point hike would take the rate to 2.25% to 2.5%,the rate that Fed officials have called near the neutral rate.
Bullard is a voting member on the Federal Reserve this year
