By Howard Schneider

ATLANTA (Reuters). – It “might be sensible” that the Federal Reserve stops further interest rate increases following anticipated half-point rate increase over the next 2 months, as the central bank evaluates the effect on inflation. Raphael Bostic, Atlanta Fed president, stated on Monday.

Bostic, in comments to Rotary Club of Atlanta: “I think it all depends on how the ground dynamics are working out after you have finished the summer.” Bostic spoke about the Fed’s efforts to control inflation and the effects of higher interest rates.

Bostic suggested that a September pause might make sense.

Bostic’s remarks are the clearest hint yet that either the Fed is seeing enough improvement in inflation or the economy is weak enough to stop increasing its rates as soon as September so it can take stock.

According to investors, the Fed should continue increasing rates this year. The federal funds rate is likely to remain between 2.75 and 3.3% at year’s end. Bostic’s coworkers have called for an aggressive push to raise the rate to 3.5%. This would mean half-point increases at Fed’s last meetings of the year.

Bostic indicated that he expected a smaller set of moves and the funds rate to end at 2.5% or less at 2022.

Bostic stated that while there are risks the central bank might need to be aggressiver, “I am an optimist” and assumed inflation would have begun to move lower before then.

However, concerns are rising about global slowdown, as well as how resilient the U.S. Economy will be to increasing rates and falling equity value, among other changes. Bostic indicated that he anticipates that higher borrowing costs will have an impact on the next weeks, as potential buyers become more cautious about the future economic outlook and are forced to sell their homes.

Bostic stated that the challenge is to find the right balance between increasing rates too high to trigger a recession and reducing price rises while maintaining enough control.

Bostic indicated that the economy will respond to rising rates in “the next several months”. If we don’t get on board, we run the risk of moving past the equilibrium point at which these markets reached.