Fed's Fischer says 2015 U.S. rate rise 'an expectation, not a commitment'

Sun Oct 11, 2015 9:39am EDT
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(Reuters) - U.S. Federal Reserve policymakers are still likely to raise interest rates this year but that is “an expectation, not a commitment”, and could change if the global economy pushes the U.S. economy further off course, Federal Reserve Vice Chairman Stanley Fischer said.

“Both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy,” Fischer told a group on the sidelines of the International Monetary Fund meeting in Peru.

He said “considerable uncertainties” surrounded the U.S. economic outlook, particularly the drag on exports from slowing global growth, low investment caused by the decline in oil prices and what he called a “disappointing” recent drop in U.S. job growth.

He said he felt the U.S. economy was still generating enough jobs to continue making progress towards the Fed’s goal of maximum employment and that inflation would eventually rise. Based on that, he said, the U.S. central bank should be able to keep on track with an initial rate hike expected in October or December.

But he also cautioned the group that the United States is now more exposed than ever to international events and that developments in China and elsewhere had already influenced the Fed to delay a widely expected rate increase in September.   Continued...

Federal Reserve Vice Chairman Stanley Fischer   in Jackson Hole, Wyoming August 28, 2015. REUTERS/Jonathan Crosby