Federal Reserve Vice Chairman Keeps Pundits Guessing

Riddle me this, riddle me that, when will the fed increase interest rates?

September, December, no it will be next year. These are some of the answers one will hear or see from analysts and commentators in the press.

Photo Credit: The International Monetary Fund.

Federal Reserve Vice Chairman Stanley Fischer did not make the guessing game any easier when he spoke at a joint panel discussion on Saturday at the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming.

Other participants at the meeting included European Central Bank Vice President Vitor Constancio and Bank of England Governor Mark Carney.

The meeting was focused on the subject of inflation dynamics.

Fischer according to reports told participants, “Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further.”

“With inflation low, we can probably remove accommodation at a gradual pace,” Fischer added. “Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening,” he continued.

Fischer is not big on an interest-rate increase when policy makers meet next month but was open to any option.

“I do not plan to upset your rational expectation that I cannot tell you what decision the Fed will reach by Sept. 17,” he posited.