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Bostic: Fed should keep raising rates to get to neutral

Federal Reserve Bank of Atlanta President Raphael Bostic wants the central bank to continue increasing interest rates until monetary policy reaches a more neutral stance, Reuters reported.

The Fed, which dropped its benchmark rate to essentially zero during the financial crisis, began raising interest rates in December 2015. Still, the current level is below Fed officials' estimated longer-run federal funds rate of 2.9%. At an event in Atlanta March 28, Bostic said he thinks the Fed should "get back to neutral."

Bostic voted for the Federal Open Market Committee's March 21 decision to raise the federal funds rate, which is now at a target range of 1.5% to 1.75%.

In a March 23 speech, Bostic said the Fed is "at or near" achieving its dual mandate of maximum employment and stable prices, making it an appropriate time for the Fed to be "moving toward a more neutral stance" that neither encourages nor dampens economic growth.

Fed officials had signaled in their latest round of economic projections that they want to raise interest rates two more times this year and three times in 2019, which would put the Fed around the longer-run 2.9% projection.