By Michael S. Derby 

Atlanta Fed President Raphael Bostic offered an upbeat take on the economy Tuesday and said he believes the central bank should press forward with interest-rate increases to keep the expansion moving forward.

"Unless the data talk me out of it, I view a continued, gradual removal of policy accommodation as appropriate until we get to a neutral policy rate," Mr. Bostic said in the text of a speech to be delivered in Baton Rouge, La.

While it is hard to precisely estimate the point where monetary policy becomes neutral, Mr. Bostic said, "we are still a few rate hikes away" from achieving that, and right now, monetary policy is still providing support to the economy.

Mr. Bostic is currently a voting member of the rate-setting Federal Open Market Committee. That body has raised rates three times this year and boosted its overnight target rate range to between 2% and 2.25%. While market turbulence over recent days has caused some to question the policy outlook, the Fed is still widely expected to boost rates again at the close of the year and to keep raising rates next year.

Fed officials are actively debating whether they'll need to get rates to a neutral level or go beyond, even as a number of officials have said it is quite challenging to gauge the potency of policy on the economy. Mr. Bostic appears be in the former camp.

Once the Fed gets to neutral and "our policy foot is off the gas, but not on the brake, I will look to see if consumers and businesses continue to act in ways that do not suggest a buildup of excesses," Mr. Bostic said. "If that continues, it will give me confidence that the economy is on a sustainable path," he said.

Mr. Bostic also addressed those who believe there is value in running the economy hot to ensure that the benefits of the expansion flow to all groups. He said the key is making sure that any gains are in fact durable, and he said that's what policy makers should focus on.

The official noted "economic growth is on a strong trajectory" and added, "it is on solid footing and hasn't been materially pushed higher or lower." He also said "I do see the risks as being tilted to the upside."

Mr. Bostic said companies have been "resilient" in the face of recent trade tension and tariffs.

The official offered a modest warning on price pressures, with companies reporting to him "an upward shift in their cost structure." But as it now stands, "inflation remains stable, hovering around the FOMC's 2% objective," he said.

Mr. Bostic also said that given the vigor of growth data this year, he may be readying to boost his estimate of what the economy can sustainably deliver, adding there is evidence "the economy is shifting into a higher gear." He said he's revised higher his growth estimates for this year and next.

Write to Michael S. Derby at michael.derby@wsj.com<mailto:michael.derby@wsj.com>

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

October 23, 2018 13:44 ET (17:44 GMT)

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