The Federal Reserve likely will need to pause before implementing further rate hikes as it assesses the economy’s direction and the impact of its previous policy moves, Kansas City Fed President Esther George said Tuesday.
“A pause in the normalization process would give us time to assess if the economy is responding as expected with a slowing of growth to a pace that is sustainable over the longer run,” George said in prepared remarks for a speech in Kansas City. “Failure to recognize these lags could lead to an overtightening of policy, a downturn in economic growth and an undershooting of our inflation objective.”
Echoing recent comments from several other Fed officials, George said policymakers have the time now to be patient in assessing whether further rate hikes are necessary.
Since beginning the current round of rate normalization in December 2015, the Federal Open Market Committee, of which George is a voting member, has approved eight increases, the most recent of which came last month. Her stance is something of a departure from her longstanding reputation as one of the committee’s more hawkish members as she has pushed in the past for the Fed to unwind its historically accommodative policy moves.
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