Atlanta Federal Reserve's Bostic: Taper warranted if current trends continue, but...

3 weeks ago 4

Atlanta Federal Reserve's Raphael Bostic has stated that the US is in the midst of a lot of "jumble" in the labour market, but the economy is on a firm footing for a full recovery.

Key comments

Fed trying to keep track of labour choices, child care, automation, other issues to understand how the economy has changed.

Homebuyers today in "much stronger position" than early 2000s, with lower risk of default.

Confident that as the economy heals yield curve will steepen.

Taper warranted if current trends continue, but still in a pandemic driven economy.

Climate change does present risks to assets and thus to portfolios of those that own them.

Healthy to be having conversations about how climate is changing asset risk profile.

Not the job of the Fed to tell people what they can or cannot invest in.

Not acknowledging climate risk could mean US economy performs worse than otherwise.

Notion of a digital account at the Fed for every American would be a "radical" departure, with information, privacy and intermediation issues to resolve.

Any decision on central bank digital currency "a ways off," given the complexity of issues to resolve.

Market implications

The Fed taper is not a done deal for November according to Bostic's rhetoric as he airs on the side of caution which makes next week's Nonfarm Payrolls event key for markets. 

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