Fed policymakers signal no rush to raise US interest rates

A man walks past the Federal Reserve Bank in Washington, DC, US in 2015.
A man walks past the Federal Reserve Bank in Washington, DC, US in 2015.PHOTO: REUTERS

SAN FRANCISCO (REUTERS) - Federal Reserve policymakers appear to be in no hurry to raise US interest rates despite signs that the US economy is near full employment, with two more top Fed officials expressing that view on Thursday (July 14).

St Louis Fed President James Bullard, speaking with reporters, repeated his position that only a single rate rise is needed for the next couple of years unless some unexpected shock moves the economy to a better or worse state.

"In the aftermath of Brexit people want to wait and see and I'm happy to go with that for now," said Mr Bullard, a voting member of the US central bank's rate-setting committee. "There's really no rush."

Earlier on Thursday, Atlanta Fed President Dennis Lockhart, at the Global Interdependence Center's Rocky Mountain Economic Summit, said that he wants to be "cautious and patient" with any future interest rate increases while he waits for the fallout from the recent Brexit vote to become more clear.

The pair follow on comments from several other Fed policymakers in recent weeks who appear poised to remain on hold while they wait to see how potential headwinds from Europe or elsewhere shake out.

Britain's vote on June 23 to exit the European Union sent investors scrambling for safe assets and cast a pall over the world growth outlook.

Just last month, most Fed officials signaled they expected to raise rates at least two times this year.

The Fed next meets July 26-27 and is expected to leave the target for its short-term policy rate unchanged. Traders are betting the Fed will not touch that rate, now between 0.25 per cent to 0.5 per cent, until next June at the earliest.

Unemployment claims data released on Thursday pointed to further momentum in the labor market after job growth surged in June, and a separate report showed producer prices recorded their biggest gain in a year.

Still, not everyone at the Fed has given up on the idea of raising rates.

Kansas City Fed President Esther George on Thursday said she will keep an eye on whether the recent flight to quality by global investors could hit the US economy. But she signaled no retreat from her view, laid out earlier this week, that rates are too low for the strength of the economy.

And even Lockhart, a non-voter this year at the Fed, on Thursday said it was possible the Fed could raise rates once, or even twice, this year, if data allowed it.