Federal Reserve Vice Chairman Stanley Fischer said central bankers are weighing the risk of raising interest rates prematurely against the danger of having to play catch-up if they wait too long.
“Which is better, early and gradual or late and steep? If we raise the rate from zero it will be harder to go back to zero if there is a problem,” Fischer said Monday in a speech at IDC Herzliya in Herzliya, Israel.
The U.S. economy is emerging from a shaky first quarter. Payrolls grew by 223,000 in April after a March slump that was worse than initially thought while the unemployment rate fell to 5.4 percent, the lowest in almost seven years. Third quarter growth was just 0.2 percent at an annualized pace after a 2.2 percent gain in the final three months of 2014.
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