You are here

Fed rate hike possible this year; Greece looms: Rosengren

Friday, July 10, 2015 - 23:54

[WASHINGTON] The Federal Reserve might hike US interest rates later this year as long as inflation firms and Greece and other international wildcards do not get in the way, a top Fed official said on Friday.

Boston Fed President Eric Rosengren, a dovish US central banker, said negotiations over Greek debt and a slowing Chinese economy were among the possible disruptions that could delay the beginning of tighter US monetary policy.

Questions remain over inflation, the US dollar, and energy prices, so for now the central bank continues to await data that confirms its belief that the US economy will continue to improve, he said.

"Were the US economy to unfold as I and other policymakers expected in our June forecasts, beginning the policy normalization process later this year might be appropriate," said Mr Rosengren, who does not have a vote on the Fed's policy committee this year.

He warned that the Fed's inflation and job market forecasts are subject to "considerable uncertainty," and acknowledged that he downgraded his assessment of full US employment to 5 per cent from 5.25 per cent, a sign of patience in hiking rates.

"The emergence in recent weeks of questions about whether Greece and its creditors can reach a viable agreement complicates projections about how economic conditions are likely to unfold over the course of the summer and beyond," said Mr Rosengren.

REUTERS