Some officials at the Federal Reserve still want a rate hike in 2015.
The Fed didn’t raise rates in September and the U.S. economy has struggled since then with a mediocre September jobs report, low retail sales last month and third quarter economic growth now projected to be below 1%.
But it’s time for the Fed to do a rate hike and get off near-zero rates, says Loretta Mester, president of the Federal Reserve Bank of Cleveland.
“The economy can handle an increase in the fed funds rate,” Mester said in a speech at New York University Thursday night, referring to the Fed’s key interest rate. “It is appropriate for monetary policy to take a step back from the emergency measure of zero interest rates.”
She’s not alone. Presidents of the St. Louis Fed and Richmond Fed, James Bullard and Jeffrey Lacker, also said this week they want rates to be higher. Bullard, however, admitted it would be tough to raise rates in October since not much time has passed since the September meeting.