Fed Tarullo Worried About Low Inflation

Federal Reserve Governor Daniel Tarullo said on Monday there is still a lot of uncertainty on inflation and that the path of interest rate hikes should be influenced by how much inflation moves towards the Fed’s 2 percent target rate.

“It’s hard to overlook the fact that both market-based measure of inflation compensation and survey-based measures of inflation expectations are sort of near historic lows … it will be important for us to keep our eye on both those kinds of measures,” Tarullo said in an interview with Bloomberg TV.

As such, too much attention recently had been focused on particular months for rate rises rather than on the pace of monetary tightening, he said.

Tarullo noted that the U.S. economy seemed to be “chugging along” but said low inflation meant that despite strong jobs gains, it was still overall a mixed picture.

The Fed is widely expected to raise it interest rates for the first time in about a decade at its Dec. 15-16 policy meeting, with the debate already shifting to the pace of rate hikes going forward.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza