USA: Fed Could Raise Rates Before Summer 2015

Janet Yellen

The US Federal Reserve (Fed) could raise interest rates sooner than the markets expect, ie before summer 2015, said one of its leaders in an interview with the German Press Released on Tuesday.

“The markets assume that it (the rate increase) will happen in the summer. I think it could happen sooner. But of course I can be wrong,” said Richard Fisher, president of the regional branch of the Dallas Fed, in an interview with the German business daily Handelsblatt.

Voting member of the Monetary Policy Committee (FOMC) looked upon as a “hawk”, Mr. Fisher said he was concerned that the US central bank waits too long before coming up with a decision on tightening of monetary policy.

“If the Fed reacts too late, it is possible that the economy react more violently to a rise in inflation and fall into a new recession,” he said, according to a preview of his remarks released in advance the newspaper.

The US central bank had said in late October it was ending its outstanding program of asset purchases (Treasury bills and securities backed by mortgages), citing “strong gains” on the job market.

The institution had also kept its key rates unchanged, at close to zero where they are fixed since late 2008.

If the Fed had promised again to leave interest rates unchanged for a “considerable period of time,” it added that if the progress of inflation and employment accelerates, a first rate hike “could be involved earlier” than expected.

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