Date
25 March 2017
Barring unforeseen circumstances, Stanley Fischer expects the Fed to raise interest rates this year. Photo: Bloomberg
Barring unforeseen circumstances, Stanley Fischer expects the Fed to raise interest rates this year. Photo: Bloomberg

Fed official: US rate rise an expectation, not a commitment

US Federal Reserve policymakers are still likely to raise interest rates this year, but that is “an expectation, not a commitment”, Fed vice chairman Stanley Fischer said.

Things could change if the global economy pushes the US economy further off course, Reuters quoted him as saying.

“Both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy,” Fischer told a group on the sidelines of the International Monetary Fund meeting in Peru.

He said “considerable uncertainties” surrounded the US economic outlook, particularly the drag on exports from slowing global growth, low investment caused by the decline in oil prices and what he called a “disappointing” recent drop in US job growth.

Fischer said he felt the US economy was still generating enough jobs to continue making progress toward the Fed’s goal of maximum employment and that inflation would eventually rise.

Based on that, he said, the US central bank should be able to keep on track with an initial rate hike expected in October or December.

But he also cautioned the group that the United States is now more exposed than ever to international events and that developments in China and elsewhere had already influenced the Fed in its decision to delay a widely expected rate increase in September.

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