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Raphael Bostic, president of the Atlanta Federal Reserve Bank, said Friday that the Federal Reserve's patience with monetary policy does not guarantee that interest rates will remain unchanged for the rest of the year.
"Fixed action is certainly one of the options, but it depends on how the economy reacts. For me, it's possible to raise or lower interest rates," Bostek said at the end of a monetary policy meeting at the Federal Reserve Bank of San Francisco.
The comments were the first to be made by policymakers after the Federal Reserve unexpectedly turned to a more dovish policy stance on Wednesday. Estimates released after the policy meeting showed that 11 of the 17 Fed policy makers expected no rate hike this year, compared with only two in December.
Bostek spent most of his speech praising the benefits of the Federal Reserve's new "ample reserve" monetary policy approach. And at the end of the day, it sends a direct message to the market about what it calls the imprecise interpretation of the Fed's intentions.
He pointed out that the Fed's patient stance did not mean that it excluded interest rate hikes for the rest of the year, nor did it limit the Fed's policy options.
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