Fed officials push financial stability to centre of rate debate

New York

WITH US inflation low and seen staying that way, Federal Reserve officials who favour raising interest rates point to preserving financial stability as another reason to move. Chicago Fed president Charles Evans, a key advocate of delaying action, is making a new argument to push back against that notion.

His comments in Beijing earlier on Wednesday touch on key questions for the policy-setting Federal Open Market Committee (FOMC) when it meets this month: Do officials need to increase rates before inflation rises to their 2 per cent target, in order to avoid the need for faster tightening later on and to keep financial risks at bay? Or should they let inflation reach their goal first to make sure it gets there and stays there?