Federal Reserve has few reasons to change ‘patient’ approach to policy GlobeBusiness
With inflation muted but other risks to the U.S. economy on the rise, the Federal Reserve’s patience on policy is nowhere close to running out, with one previously hawkish central banker on Tuesday signalling he could wait until at least June before touching interest rates again.
That timeline suggests that for him at least, the Fed’s next two meetings in mid-March and in late April would be too soon to expect a change to policy. The next meeting after that takes place in mid-June.It was a stark shift for a policy-maker who for most of last year warned that the economy could overheat without rate hikes. On Tuesday, Rosengren noted little inflation pressure and sharp market swings at the end of last year made those concerns seem “less pressing.
“Months, not weeks,” according to Dallas Fed President Robert Kaplan, who earlier on Tuesday added worries about record corporate debt to the list of factors that bolster his commitment to patient policy. Fed policy-maker comments Tuesday follow those of Fed Chair Jerome Powell and Fed Vice Chair Richard Clarida last week. Both laid out a case for sticking to patience even though some economic models suggest the current 4 per cent unemployment rate justifies jumping in with rate hikes to head off inflation.
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