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2/2 © Reuters. FILE PHOTO: Customers pay cash to buy up stocks of wine, food and kitchen supplies as the French restaurant Montmartre closes after 20 years of operation on Capitol Hill due to financial pressures caused by the coronavirus disease (COVID-19) outbreak in W 2/2 By Howard Schneider

(Reuters) -Atlanta Federal Reserve President Raphael Bostic on Monday said he expects the U.S. central bank will deliver two or three more half-percentage-point interest rate hikes but won’t need to use anything bigger, noting some hopeful signs on inflation.

“I would say that (a 75-basis-point rate hike) is a low probability outcome given what I expect will happen in the economy over the next three to four months,” Bostic told Reuters during an interview on Twitter (NYSE:TWTR) Spaces.

“A number of supply chain challenges that have really been just persistent through the pandemic are starting to show signs of easing,” he said.

Trucking companies are no longer turning down business, as they were earlier, and shipping bottlenecks are easing, he said.

Meanwhile, Bostic said he sees as yet unrealized downside risks to demand from the war in Ukraine and simply as households react to high inflation by potentially pulling back on spending.

“I am going to stay open to the possibility that those sorts of adjustments will work in concert with our policy movements and get us to a place where inflation is approaching our policy … target at a faster rate than maybe some of my colleagues are projecting,” Bostic said. “In which case we will not need to do nearly as much.”

The Fed last week raised its target for overnight bank-to-bank lending by a half a percentage point to 0.75%-1%.

Fed Chair Jerome Powell said two more such rate hikes are likely at the U.S. central bank’s coming policy meetings as policymakers try to decisively curb inflation that is running at a 40-year high.

“That’s very aggressive by historic standards,” Bostic said. “I’m hopeful that will actually do the job in terms of really taking the reins and wrestling inflation closer to our target.”

A U.S. government report Wednesday is expected to show consumer price inflation slowed slightly in April, and Bostic said he will be watching month to month data closely.

At the same time, he said, the labor market has a lot of momentum.

That leaves room for a scenario under which rate hikes slow demand and inflation without forcing businesses to resort to layoffs or stop raising wages.

“If we start to see signs that businesses are thinking about reducing their forces that would be a signal that would be quite meaningful, and it would be quite a departure from really anything we hear today,” Bostic said.

The April unemployment rate was steady at 3.6% as businesses hired more workers than expected, the latest government job market report showed on Friday.