Fed officials tell activists rate hikes won't derail economy

Thu Aug 25, 2016 10:08pm EDT
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By Ann Saphir and Jason Lange

JACKSON HOLE, Wyo. (Reuters) - An unusually large group of Federal Reserve policymakers appeared before activists on Thursday and defended their plans to raise interest rates to keep the U.S. economy from eventually overheating.

Several policymakers said raising interest rates gradually would allow them to stimulate the economy for longer, but that an overheating economy could end in a recession.

"It's not about trying to stop the economy from growing," San Francisco Fed President John Williams told about 100 labor activists from the Fed Up coalition who pressed policymakers not to raise interest rates. "We're going to keep this economy growing, we are going to run it hot."

"My objective is not to slow down the economy," said Kansas City Fed President Esther George, who organized the meeting ahead of the annual central banking conference in Jackson Hole, Wyoming.

Fed policymakers have yet to decide when to raise rates again after lifting them in December for the first time in nearly a decade. Policymakers are divided whether to hike soon or take a more cautious approach.

A core group of Fed policymakers, the Board governors, are currently debating what is going on in the U.S. economy and how to set policy, Fed Vice Chair Stanley Fischer told the meeting.

"Everything that's being argued here is being argued in the board as well," Fischer said.

Much of the public commentary of Fed officials in recent weeks suggests the central bank is moving closer to a hike.   Continued...

John C. Williams, President and CEO of the Federal Reserve Bank of San Francisco, speaks at the Milken Institute Global Conference in Beverly Hills, California, U.S., May 2, 2016. REUTERS/Lucy Nicholson