Fed's Bostic sees 'mixed signals', mentions possible cut in rates

In remarks prepared for a speech at the Chattanooga Area Chamber of Commerce, Raphael Bostic said he expected another year of "solid" growth in the US in 2019, although his forecast was for a "bit slower" pace of expansion as the temporary effects from fiscal stimulus and tax reform began to fade.

But the "mixed" economic cross-currents he was seeing had led him to believe that the appropriate response to the mixed economic signals was to be "patient in adjusting the stance of policy and to wait for greater clarity about the direction of the economy and the risks to the outlook."

Among the risks to his baseline outlook, Bostic cited slowing global growth, uncertainty around trade policy, concerns about domestic growth and worries regarding the expected stance of monetary policy.

He also reiterated his stance, from two days before, that interest rates were "likely" already close to 'neutral'. On that occassion, he indicated he expected just one more interest rate hike over the course of 2019, which might turn into two or none depending on how economic conditions played out.

Bostic reportedly also indicated he expected the partial federal government shutdown to a "small aggregate impact" on the economy if it remains short, but added that it might become more "material" if it endured.

Reports also put Bostic down as indicating that the next move in rates could be lower if downside risks came to bear.

The policymaker also pointed out that the shutdown, which had seen the release of economic reports by the Department of Commerce delayed, was making it harder for the Fed to do its job.