Date
15 December 2017
Dallas Fed president Richard Fisher says US second-quarter growth was “uber strong”. Photo: Bloomberg
Dallas Fed president Richard Fisher says US second-quarter growth was “uber strong”. Photo: Bloomberg

Fed must weigh wage pressure in setting rate policy, says Fisher

The United States Federal Reserve mustn’t “fall behind the curve” as it weighs when to start raising interest rates, Dallas Fed president Richard Fisher said, citing strengthening US growth and building wage-price pressures.

Fisher, a vocal advocate for tighter monetary policy to protect against inflation, also said today that two soon-to-be-released economic reports from his Fed district would “knock your socks off”, Bloomberg reported.

“I don’t want to fall behind the curve here,” Fisher said in a Fox News interview. “I think we could suddenly get a patch of high growth, see some wage-price inflation, and that is when you start to worry.”

Fisher dissented on September 17 at the last meeting of the Federal Open Market Committee, when the Fed retained a pledge to keep rates near zero for a “considerable time” after its asset purchases halt at the end of next month.

He called US second-quarter growth “uber strong”, referring to the upward revision last week to an annualized rate of 4.6 percent from 4.2 percent previously estimated, and said history had shown that wage pressures could accelerate when unemployment got below current levels of 6.1 percent.

In addition, Fisher said surveys of wage-price pressures in the Dallas Fed district, which includes Texas, northern Louisiana and southern New Mexico, were the highest since before the recession, and other indictors were also buoyant.

“We’re going to be releasing some data on Monday and Tuesday, our new surveys, that I think will just knock your socks off,” he said.

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RA/JL

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