Russia’s economic crisis won’t stop the Federal Reserve from dropping a vow to keep interest rates low for a “considerable time,” economists said, even as policy makers may acknowledge global risks have intensified.
Central bankers meeting today and tomorrow may say they’re monitoring markets carefully as Russia’s currency collapse threatens to destabilize other regions, said David Stockton, a former Fed research director who led presentations of economic and financial data for policy makers. At the same time, they will keep their focus on U.S. economic strength and probably replace the language on timing with something that says they’re going to be patient with rate rises, he said.
“Policy moves slowly and deliberately and in response to a full set of evidence accumulated since the last meeting, and not in response to the most high-frequency data from volatile financial markets,” said Stockton, a senior fellow at the Peterson Institute for International Economics in Washington. Officials don’t want to signal that the Russian crisis will “deflect them from the path that they’re on, which is probably a tightening in the middle of 2015.”