|
"What we need most, now that we are near full employment and
approaching our target inflation rate, is faster potential
growth," Fischer, the Fed's second-in-command, said in prepared
remarks before an economics conference in New York.
He added it was critical to the future of the U.S. and global
economies, and that more study should be devoted to developing
policies that can influence the rate.
The so-called equilibrium real interest rate is the level of
borrowing costs associated with stable inflation and full
employment.
Assessing the long-run rate is key to Fed policymakers
forecasting how much they will ultimately tighten policy. Lower
potential long-run growth necessitates a lower equilibrium
federal funds rate.
The Fed raised interest rates for the first time in a decade
from near zero last December.
On Tuesday, the Fed surprised financial markets by signaling in
the minutes from its last meeting that it may be ready to raise
rates in June if the U.S. economy continues to strengthen.
Fischer said in March the Fed is not far from meeting its 2
percent inflation target.
(Reporting by Lindsay Dunsmuir; Editing by Meredith Mazzilli)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
