Fed Vice chair Says Interest Rates Much Closer to Neutral

Federal Reserve Vice Chairman Richard Clarida expressed a cautious view Tuesday about how the central bank should proceed in raising interest rates.

The Federal Open Market Committee’s newest member, in a speech delivered to bankers in New York, emphasized the importance of policymakers being “data dependent” in how they approach future moves.



“A monetary policy strategy must find a way to combine incoming data and a model of the economy with a healthy dose of judgment — and humility! — to formulate, and then communicate, a path for the policy rate most consistent with our policy objectives,” he said in prepared remarks.

Assessing the current state of interest rates, Clarida said the FOMC, which sets Fed monetary policy, is “much closer” to a so-called neutral level that is neither stimulative nor restrictive than it was when the rate-hiking cycle began in December 2015.

“How close is a matter of judgment, and there is a range of views on the FOMC,” he said.

Via CNBC

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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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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