As KC Fed leader calls for a rate increase, Chicago Fed chief sees no hurry

Two Federal Reserve officials took opposite sides of the policy debate, with one arguing that overseas risks warrant a delay in raising rates and the other saying that the U.S. economy can withstand an increase now.

Esther George, president of the Federal Reserve Bank of Kansas City, said Thursday that raising rates without delay would allow the central bank to tighten at a gradual pace.

“We would be wise to act modestly but act now,” George, who votes next year, told a luncheon event in Stillwater, Okla. “Starting now to move rates up slowly and deliberately will allow the economy to adjust to a more normal and, in my view, appropriate stance of monetary policy.”

Chicago Federal Reserve president Charles Evans told reporters Thursday that while the U.S. economy is sound, uncertainty caused by the crisis in Greece and doubts over Chinese growth are reasons for caution.

“I just don’t see why we should be in a hurry with all of the risks that we face,” said Evans, who votes on policy this year.

“A little more time doesn’t hurt,” he said in Chicago, repeating a call to keep rates near zero until mid-2016.

Policymakers considering when to raise rates for the first time since 2006 are weighing continued job gains against a darkening global economic outlook. Minutes of their June meeting released Wednesday show they saw the economy moving toward conditions that would support a rate increase while they also expressed concern about weak consumer spending and risks from China and Greece that have since intensified.

Most Fed officials expect to raise rates this year, according to their quarterly projections released in June. A solid 76 percent majority of 51 economists surveyed by Bloomberg earlier this month expect liftoff to take place at the Sept. 16-17 meeting of the Federal Open Market Committee.

This story was originally published July 9, 2015 at 2:10 PM with the headline "As KC Fed leader calls for a rate increase, Chicago Fed chief sees no hurry."