Global economic uncertainties might have impacted the timing of a U.S. interest rate rise but the market continues to expect the Fed to act, European Central Bank council member Erkki Liikanen said on Saturday.
The U.S. Federal Reserve left rates unchanged at near-zero levels on Thursday, postponing a widely expected hike due to “less certain” global economic outlook.
“There has been uncertainty globally which perhaps has an impact on timing, but surely the market expects the Fed to act sooner or later,” Liikanen said in an interview with public broadcaster YLE.
Asked about why the Fed was pressured to increase rates, Liikanen noted that the U.S. economy had strengthened consistently for some time.
“Unemployment has declined and the number of open work positions has increased. In a certain time frame, when capacity becomes fully utilized, acceleration of inflation is obvious,” he said.
“Because of this, central banks usually aim to act beforehand.”