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"Risks to the outlook appear to be predominately to the upside,"
Kansas City Federal Reserve President Esther George said in
remarks prepared for delivery to a bank-sponsored Economic Forum
in Lincoln, Nebraska.
Given the economic momentum, the Federal Reserve should continue
to raise interest rates and "carefully calibrate its policy to
lean against a potential buildup of inflationary pressure or
financial market imbalances."
George is a reliable hawk at the U.S. central bank, and in
characterizing risks as to the "upside" she is subtly
differentiating herself from the core at the Fed, who have
termed risks as "roughly balanced."
But her remarks come as support for a potentially faster pace of
rate hikes appears to be building among Fed officials, including
the influential chief of the New York Fed.
Such faster rate hikes could act to restrain the boost to
consumer and business spending that many Fed officials,
including George, see as the likely result of the Trump
administration's recent tax overhaul.
On Thursday, George forecast moderate economic growth ahead
would help tighten labor markets and put upward pressure on
inflation, which she said could reach the Fed's 2-percent goal
this year. Inflation has undershot that goal for years, and
though most Fed officials see it rising this year, few expect it
to reach the target by year's end.
The Fed is widely expected to raise rates when policymakers next
meet March 20-21; markets currently expect two more rate hikes
by year end, exactly the pace the Fed forecast when it last
released projections in December.
(Reporting by Ann Saphir; editing by Diane Craft)
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