Fischer said monetary policy isn’t equipped to boost productivity growth. He said the “key” to boosting output per hour “is more likely to be found in effective fiscal and regulatory policies,” citing improved public infrastructure, better education, and incentives for private investment.
Fed officials raised the benchmark lending rate to a range of 0.25 to 0.5 percent in December. In June, their median estimate predicted at least two hikes this year. Investors see roughly 50-50 odds of a rate increase by year-end, according to the prices of federal funds futures contracts. The rate-setting Federal Open Market Committee next meets Sept. 20-21, and will convene again in November and December.
Reading Fischer’s speech, “you would say they are ready to move,” said Daniel Thornton, a former St. Louis Fed research economist who now works independently. “It seems that he is trying to hint in that direction, but I don’t think they will do anything before the election” in November.
This article was provided by Bloomberg News.