Fed has done 'everything' to avoid rate liftoff surprise, says vice-chair

The US Federal Reserve Building.
The US Federal Reserve Building.PHOTO: AFP

SAN FRANCISCO (REUTERS) - The Federal Reserve has telegraphed its imminent interest rate hike so well that central bankers elsewhere have even begun to get impatient about it, the Fed's second-in-command suggested on Thursday (Nov 19).

"In the relatively near future probably some major central banks will begin gradually moving away from near-zero interest rates," Fed vice chairman Stanley Fischer told the San Francisco Fed's biannual Asia Economic Policy conference.

"While we at the Fed continue to scrutinize incoming data, and no final decisions have been made, we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market (and other) central bankers have, for some time, been telling the Fed to'just do it'."

The US central bank is widely expected to raise rates for the first time in nearly a decade when policymakers meet in Washington on Dec 15-16. Sentiment for a December hike took firm hold at the Fed's Oct 27-28 policy meeting, according to meeting minutes released on Wednesday.

"We actually don't take orders from other places," Mr Fischer added, but the fact that other central bankers are asking the Fed to get on with a rate hike indicates they have "made their preparations."

The bulk of Mr Fischer's remarks focused on prospects for growth in Asia, which he said would likely continue to slow as those economies make the transition to richer, less export-dependent structures. Worries about the effects of China's slowdown played into the Fed's decision to put off raising rates when it met in September.

"China is for some time likely to continue to grow faster than the rest of the world," Mr Fischer said. "The region is still expected to significantly outpace the global economy and make by far the largest contribution to global growth in the years ahead."

Still, slower China growth will continue to put downward pressure on metals and other commodity prices, although the outlook for oil prices is less certain because richer economies tend to consume more oil per person, putting potential upward pressure on oil prices. Mr Fischer said.