NEW YORK (Reuters) – Influential Federal Reserve Vice Chair Randal Quarles, setting aside recent data weakness and complaints from the White House about interest rate hikes, on Friday gave a bullish view of the U.S. economy and said more rate increases may be needed if recent positive trends in productivity and investment continue.
Quarles said he agreed it was “prudent” to put further hikes on hold while the Fed waits for overseas risks to play out, and to see if recent disappointing retail sales and job figures were an anomaly or the leading edge of a slow down.
Quarles - Data - Bit - Strength - Wage
But Quarles said he was inclined to dismiss the recent data as “a bit odd” and “inconsistent” with underlying strength, wage gains that should be boosting households, and a rise in productivity he feels could be “persistent” and lead to stronger growth down the road.
While the Fed remains on hold for now, “my sense is that further increases in the policy rate may be necessary at some point,” Quarles said at a Manhattan Institute monetary policy conference. It was a view he said was “consistent with my optimistic view of the economy’s growth potential and momentum.”
Level - Rates - Growth - Estimate - Rate
The current level of rates, he said, was still stimulating growth, with his estimate of the neutral rate “somewhat north of where we are now,” in a range of 2.25 and 2.5 percent.
Quarles remarks put him at the more aggressive edge of a debate at the Fed that has recently focused on weak inflation, possibly...
Wake Up To Breaking News!