The time has come for the Federal Reserve to raise interest rates, Esther George, president of the Federal Reserve Bank of Kansas City, said Thursday.
Citing improvements in the labor market, George told CNBC, “I don’t want us to be behind the curve in beginning to normalize interest rates.
“When you see the economy getting as close as we are to full employment, to stable inflation, it would suggest to me that the time has come to do that.”
George, who will not rotate into a voting seat again on the Fed’s policy-setting committee until 2016, is considered to be one of the Fed officials least tolerant of inflation. Speaking ahead of the Kansas City Fed’s monetary policy symposium in Jackson Hole, Wyo., George said in several televised appearances that the Fed risked moving too slowly.
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“I think a very natural response when you get to this point is worrying that you might derail the recovery,” she told Fox Business Network. “But then again we’ve seen data come in stronger than we expected.
“I think when you look on the whole, thinking about the progress you’ve made and then acting avoids getting behind the curve because we know from history that brings its own set of consequences.”
The U.S. central bank was on track to end a bond buying stimulus program in October but said it was appropriate to wait a “considerable time” after that before raising benchmark rates, which it has held near zero since December 2008.
Asked on Bloomberg television how she would know the time was right, George said: “I think we’re getting close to that.
“Some of the policy benchmarks that we looked at and have been looking at for some time are already signaling that we should be above zero interest rates.”