Inflation too low to justify rate hike – Fed’s Fischer

11 Aug 2015
Financial Nigeria

Summary

U.S. inflation was just 0.3% in June, in the measure most closely watched by the Fed, well below the Fed's longer-term 2% goal.

Stanley Fischer, Member, Board of Governors, U.S. Fed

Full employment is nearly within reach, but low inflation means it's not yet time for the central bank to raise interest rates, Federal Reserve vice chairman Stanley Fischer said yesterday.


Speaking on Bloomberg TV, Fischer said: "We're in a situation with very low inflation, nearly full employment, but very low inflation.


"We're not going to be as low as we are now forever, and we need to be looking ahead as we go," he added.  


U.S. inflation was just 0.3% in June, in the measure most closely watched by the Fed, well below the Fed's longer-term 2% goal.


Some of the gap is due to factors that are likely to recede as the year goes on, Fischer said, such as the steep drop in the price of oil last year. But even stripping out the effects of energy and food prices, core inflation was 1.3% in June.


The Fed, however, has a dual mandate of both full employment and stable prices. On the employment mandate, Fischer said, the Fed is doing "just fine."


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