Fed should raise interest rates by between 4% and 4.5% by December, says Atlanta Fed official

The Federal ReserveFederal Reserve should get its benchmark rate to between 4% and 4.5% by December and then pause, according to Atlanta Fed President Raphael Bostic on Wednesday.

I would like to reach a point where policy is moderately restrictive - between 4% and 4.5% by the end of the year - and then hold at that level and see how the economy and prices react, Bostic said in a speech at Northwestern University.

Some Fed officials want to raise the central bank's benchmark rate up to a range of 4.5% -- 4.75% in early 2023, before pausing. The Atlanta Fed president stressed that he was not advocating a quick turn toward accommodation, despite the fact that a pause might be in order. Bostic said that was not so fast for those who think the Fed is going to begin cutting rates in 2023. Bostic will not be a member of the Fed's interest-rate committee until 2024. San Francisco Fed President Mary Daly said investors who are betting on rate cuts in 2023 are wrong. Bostic said that the U.S. economy is still in the inflationary woods. The past couple of monthly inflation prints produced a mixed bag, with some evidence that the pace of month-to-month price increases has slowed. The August inflation reports were a sobering reminder that price pressures are broad and stubborn, Bostic said. He said that it will take some time to bring inflation down to 2%. He said that there is evidence that the Fed's rate hikes this year are already working. Bostic said that the tightening of the FOMC may have sapped momentum because of the soaring housing prices. This week, mortgage rates hit their highest level in 16 years. The DJIA, SPX, ended up a bit lower on Wednesday after two days of solid gains. The yield on the 10 year Treasury note TMUBMUSD 10 Y rebounded to 3.75%.