NEW YORK Feb 22 The Federal Reserve is set to
gradually raise interest rates as long as the U.S. economy
continues on its current path, an influential Fed governor said
In a speech that shed little light on whether the U.S.
central bank would move as soon as next month to tighten policy,
Governor Jerome Powell said the Fed was wise to have been
patient in recent years.
"But risks now seem to me to be more in balance. Going
forward, I see it as appropriate to gradually tighten policy as
long as the economy continues to behave roughly as expected,"
Powell, a permanent voter on Fed policy who is seen as a
centrist, told the Forecasters Club of New York.
Powell, who stressed the need for fiscal policies that
encourage Americans to participate in the labor market and that
invest in infrastructure, said the U.S. economy is nonetheless
headed in the right direction after years of recovery from
He expects growth to continue at the roughly 2-percent pace
currently, and inflation to reach a 2-percent Fed target over
the next couple of years. Joblessness should fall a bit further
while the labor market should continue to tighten, he predicted.
"We appear to be close to our employment objective, and are
nearing our inflation objective," Powell said. "While the pace
of progress has at times been frustratingly slow, this outcome
is a better one than that achieved by most other advanced
The Fed has raised rates once in each of the last two years
in a tentative sign of optimism on the economy.
But policymakers expect to pick up the pace of hikes this
year as unemployment, down to 4.8 percent, is expected to boost
inflation and as President Donald Trump and the
Republican-controlled Congress are expected to cut taxes and
boost spending. Median forecasts from December suggest they see
roughly three rate hikes in 2017.
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)