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The
U.S. central bank's second-in-command said the Fed was
"reasonably close" to achieving its employment and inflation
goals, and the case for tightening "quite strong" as a result.
"In my view, the prospects of a continued steady expansion in
the U.S. economy are maximized to the extent that we proceed
with a gradual removal of accommodation," Fischer said in
prepared remarks to a central banking conference in Santiago,
Chile.
Not doing so runs the risk of having to tighten monetary policy
more abruptly later on, he added.
Fischer did not mention the outcome of the U.S. presidential
election in his remarks. Some other Fed officials have welcomed
the prospect of a unified government and new infrastructure
spending after years of political gridlock in Washington that
has curtailed longer-term growth prospects.
The Fed is widely expected to raise interest rates in December
but has repeatedly warned that borrowing costs would rise very
slowly over the next few years due to an aging population and
slow productivity growth.
The benchmark overnight lending rate remains close to zero seven
years after recession ended.
Fischer also said he was "reasonably confident" that spillovers
from the Fed raising interest rates would prove manageable for
foreign economies to which the United States is interlinked by
trade and financial channels.
However, he cautioned that should the U.S. have to raise rates
more rapidly it "could exert noticeably larger spillovers abroad
by putting more upward pressure on foreign interest rates and by
inducing larger depreciations of foreign currencies."
(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)
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