San Fransisco and Dallas Fed President Expected to See Interest Rate Hike Soon
John Willams and Rob Kaplan, two Fed presidents join the others that suggest Federal Reserve to raise interest rate. John Williams the San Fransisco Fed president suggested two or three interest in this year, while Kaplan expected to see the rate hike in the near future.
San Fransisco Fed president John Williams told reporters on Tuesday the Federal Resrve could raise interest rate twice or three times in 2016. He also said that he does not expect to see market turmoil when the Fed raise the rate.
"I definitely see two or three rate hikes ... as being reasonablethis year, based on projections provided by Fed officials in March and the fact that economic data has not delivered any surprises since then," Williams said as quoted by Reuters. "In a way it doesn't matter so much whether we were to raise rates in April, or June, or...July."
At the same time, Philadelphia Fed President Patrick Harker said that maintaining the interest rate in last March's FOMC meeting is the prudent decision until inflation picks up. As the inflation has only been above 2% of the Fed's target for two years since 2008. Nevertheless, Harker expected the condition to improve by the second half of 2016 to give room for rate hike.
Federal Reserve bank raised the key interest rate in December to 0.25%. The decision was triggered by the strong dollar and low oil price for the first rate hike in nine years. Still, the Fed deferred to increase the interest rate further citing uncertainy in the global economy.
In the March meeting, Federal Reserve decided to keep the rate steady. While two Fed presidents, Richmond's Jeffrey Lacker and Kansas City's Esther George dissented, suggested to raise interest rate based on improving labor market conditions.
President of the Dallas Fed Rob Kaplan in an interview with CNBC also suggested interest rate hike in the near future. However, he agreed that financial hiccup at the beginning of the year may have had more of psychological impact on consumers than previously thought.
"I want to see more data, because first quarter [growth] is very mediocre. But we still believe the underpinnings for solid growth are there," Kaplan said in the CNBC talk show Squawk Box. "We still think the consumer is going to remain strong this year. The job market is strong."
He also defended the decision to increase rate in December but prompted to be cautious. According to Market Watch, Kaplan stated, "The move in December I think was the right move but I think we're going to have to be slow and patient."
Two Fed presidents suggested US central bank to raise interest rate. San Fransisco's John Williams said two or three rate hike in 2016 is reasonable. While Dallas' Kaplan suggested to be cautious, but he expected to see rate hike in the near future.