The pace of interest rate hikes will depend on current state of the US economy and incoming economic data, Stanley Fischer, Vice Chairman of the Board of Governors of the Federal Reserve System, said.
Meanwhile, Fischer expressed optimism that productivity growth will rebound, but provided no new insight into the timing of the hike.
Previously, Fischer said that the increase in interest rates is possible not only in September, but also twice this year.
Fed’s officials are analyzing whether they are close enough to their goal of inflation near 2% and full employment to justify the central bank’s second interest rate hike since the world’s financial crisis.
The Federal Reserve raised interest rates in December 2015 for the first time since June 2006. US interest rates have remained unchanged at the 0-0.25 percent level for nearly a decade. Current Fed policy rate stands at 0.25-0.5 percent. The further rate increase has been delayed amid weak economic data and geopolitical events.
“Employment is very close to full employment,” Fischer said. While the “problem is largely about productivity growth”. Still, Fischer said he expects productivity growth will accelerate, because “remarkable things” are taking place in technology that are not reflected in the data yet.
