24 Mar 2015
Rate-hike will be warranted before 2015 end – Fed’s Vice-Chair Fischer
FXStreet (Mumbai) - Speaking to the economic club of New York, the second-in-command at the Federal Reserve (Fed), Vice-Chair Stanley Fischer tried to dissociate the current policies from mistakes that led to the Great Recession.
The economy will likely necessitate starting the rate hike process this year, the vice-chair said, while also ruling out a repetition of the previous tightening cycle.
Key Quotes:
"An increase in the target federal funds range likely will be warranted before the end of the year,"
"the expected return from raising the interest rate outweighs the expected costs of doing so."
"But a smooth path upward in the federal funds rate will almost certainly not be realized, because, inevitably, the economy will encounter shocks - shocks like the unexpected decline in the price of oil, or geopolitical developments that may have major budgetary and confidence implications, or a burst of greater productivity growth, as the Fed dealt with in the mid-1990s."
The economy will likely necessitate starting the rate hike process this year, the vice-chair said, while also ruling out a repetition of the previous tightening cycle.
Key Quotes:
"An increase in the target federal funds range likely will be warranted before the end of the year,"
"the expected return from raising the interest rate outweighs the expected costs of doing so."
"But a smooth path upward in the federal funds rate will almost certainly not be realized, because, inevitably, the economy will encounter shocks - shocks like the unexpected decline in the price of oil, or geopolitical developments that may have major budgetary and confidence implications, or a burst of greater productivity growth, as the Fed dealt with in the mid-1990s."