Another Federal Reserve policymaker on Tuesday backed an emerging U.S. central bank plan to begin trimming its bond holdings later this year, as Kansas City Fed President Esther George warned against waiting too long in order to “overheat” labor markets.
George, a hawkish official who has urged the Fed to hike interest rates, said in a speech the U.S. economy was on “solid footing” with positive surprises more likely than negative ones.
George’s support of a prompt and gradual process of paring some of the central bank’s $4.5 trillion in assets puts her in the majority of colleagues at the Fed. She added that it should be done “on autopilot,” and not adjusted in reaction to short-term economic data, and that there may be “some tradeoff” with the Fed’s parallel plan to raise rates about three times per year.
“I would support beginning the process of reducing the balance sheet this year,” said George, who does not vote on monetary policy until 2019 under a rotation.
“I do not favor prolonging action for the purpose of allowing inflation to overshoot the 2 percent goal or to press labor markets into a condition where they are overheating,” she said at the Levy Economics Institute of Bard College.
via CNBC
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alfonso Esparza
Latest posts by Alfonso Esparza (see all)
- Dollar Falls as Trade Optimism and Domestic Uncertainty Take Their Toll - 02/15/2019
- Dollar Rises on Inflation and Trade Optimism - 02/13/2019
- Dollar Rises as Trade War Talks Get Under Way - 02/11/2019