More evidence that the Fed will accelerate its timetable in 2019 as it did in 2018

Real quick here

Atlanta Fed President Raphael Bostic has added his voice to the hawkish chorus at the Fed. And what he has said bears noting because of what it means about the Fed’s policy path.

In a speech today at the 57th Annual Financial Literacy and Economic Education Conference, Bostic said the following:

The incoming economic data on the real side of the economy have come in stronger than I had been expecting earlier this year. So much stronger, in fact, that the central question in my mind is whether the apparent strength in GDP and job growth is a signal that I have materially underestimated the underlying momentum of aggregate demand. If that’s the case, the potential for overheating would require a higher path for rates than what I had been thinking.

Translation: The Fed is behind the curve and we need to be more aggressive.

Earlier today, I pointed out that the Fed’s unemployment projections have been too high relative to the path we have taken economically. And they have been forced repeatedly to revise down their projected year-end unemployment numbers.

Soon, I suspect the same will be true on the inflation front, with headline inflation running well above the Fed’s 2% target and oil prices still seeming to rise. To me Bostic is stating rather clearly that he sees the risks as now more to the upside on inflation and to the downside on unemployment. And that can only mean one thing, an acceleration in Fed rate hikes.

I am now expecting that after the December hike, depending on how well the holiday selling season holds up, the Fed will begin guidance to four rate hikes in 2019.