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"I don’t think inflation is a risk today," said
Kansas City Federal Reserve Bank President Esther George in
response to a question after delivering a speech in Albuquerque,
New Mexico. "But it’s the one thing the central bank must keep
its eye on. We must remain vigilant on that front."
George, who does not have a vote on the Fed's policy-setting
committee this year, has consistently called for tighter
monetary policy even as the Fed expanded its stimulus over the
last few years. On Monday, George repeated her view that the Fed
needs to move sooner rather than later to raise interest rates.
The Fed has kept short-term interest rates near zero since 2008,
and has quadrupled its balance sheet to $4.5 trillion with
purchases of bonds aimed at pushing down borrowing costs
further.
George said that certain measures such as food, energy and rent
are bearing down hard on consumers. But she added that on the
whole, inflation is at stable levels, though she added that just
because prices are muted does not mean they cannot suddenly
rise.
Waiting to raise interest rates until after inflation moves
beyond the Fed's 2 percent target would be a mistake and
disruptive to the markets, George said.
"If we continue to wait to see full inflation, I think we risk
having to move faster and steeper" with interest rate hikes, she
said.
(Editing by Ken Wills)
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