- Stanley Fischer, Fed Vice Chairman
Fed Vice Chairman Stanley Fischer noted that US inflation may be starting to edge higher from too-low levels, a key condition for further interest rate hike. However, Lael Brainard, Fed Governor, voiced uncertainty about whether a strengthening labour market would be sufficient to support inflation amid persistently low oil prices and a strong US Dollar. Lael insisted on a cautious approach regarding rate hikes. Both Fischer and Brainard vote on the Fed's policymaking committee, which will publish its policy decision and outlook next week.
The difference in views may not matter at the moment, when the US central bank policy makers meet next week. A rate hike is not expected at the meeting after weeks in which oil prices have remained stubbornly low and global stock market have been volatile. While Fischer agreed that prices were being dragged by falling energy prices and strong Greenback, he expects those factors to fade soon, allowing inflation to get closer to the target. Inflation by the Fed's preferred measure has been running below target for more than four years. It had climbed just 0.7% over the 12 months ending in December. In January however, the measure of inflation advanced, rising 1.3% over the past 12 months. Core inflation, which strips out food and energy, increased 1.7%.
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