Raphael Bostic, a Reuters Atlanta Federal Reserve president, said he is hopeful that the momentum of the U.S. economy will carry it through the next wave of the coronaviruses, and he remains open to accelerating the pace of the central bank's bond taper.
The World Health Organization said it was designating the new Omicron variant first identified in South Africa as being of concern. Bostic said that if the new Omicron coronaviruses variant follows the pattern seen with previous variants, it should cause less economic slowdown than the Delta variant.
Bostic said that there was a lot of momentum in the economy right now, citing strong jobs growth in the country. I'm hopeful that momentum will be able to carry us through this next wave, however it turns out. Bostic said he is open to speeding up the pace at which the central bank slows down its asset purchases so officials can have more flexibility to respond to rising inflation.
Bostic said it would be reasonable to expect the Fed to conclude its asset purchases by the end of the first quarter next year, or early in the second quarter, if the economy continues on the same trajectory. At the current pace, the Fed officials would be done tapering purchases by the middle of next year. The news of the Omicron variant spurred investors to lower their expectations on Friday for how quickly the Fed and other central banks may raise interest rates next year.
Money market traders were priced in a 53.7% chance of a rate hike by the Federal Open Market Committee's June meeting as of Friday afternoon, down from an 82.1% chance on Wednesday, according to CME's FedWatch tool.
Bostic said on Friday that he hasn't ruled out any possible actions, but he said it is certainly possible for the Fed to raise interest rates twice next year if inflation remains elevated.
Bostic said that we're not going to let inflation get out of control.