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Fed's Bostic sees one U.S. interest rate increase this year

Reuters  |  ATLANTA 

(Reuters) - The may only need to raise interest rates once in 2019, Fed said on Monday, focusing on business executives' nervousness about the and a global slowdown as factors that may hold the U.S. back.

"I am at one move for 2019," said. Though U.S. economic growth was faster than expected in 2018 and prompted the Fed to raise rates four times, said his business contacts appear less confident about the coming months, while "clouds" have developed overseas.

"The clouds, the nervousness, has gotten me to a place where I want to make sure that we do not act too aggressively," Bostic said during an event at the of

Bostic is not a member of the Fed's rate-setting policy committee this year. But his comments show how a recent selloff in stock markets, combined with weak economic data from and Europe, have begun to shift the tenor of conversation at the U.S.

While U.S. economic data remains strong, the hair-trigger moves in equity markets, doubts about the outcome of U.S. trade negotiations with China, and other factors have led Fed officials to indicate the is likely to slow down from the quarterly pace of rate increases enacted over the past two years.

Last week, Fed said the central bank would be "patient" as it assesses what to do next.

Particularly as the Fed's short-term policy rate approaches neutral, Bostic said the central bank needs to be careful not to go too far and unintentionally tighten credit markets too much.

"This is an area where we have to watch robustly," he said. The current policy rate of 2.50 percent may be at or close to neutral and "if it is 2.50 and you go to two and three quarters or three, you might have tripped beyond neutral and that would be contractionary."

(Reporting by Howard Schneider; Editing by and Paul Simao)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 00:45 IST
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