Top US Fed policymaker doesn't expect interest rate hike this year

Washington (Oct 13)  A top Federal Reserve official said Tuesday he doesn't anticipate the central bank would raise a key interest rate this year, signaling that recent lackluster U.S. job growth and a slowing global economy have led to a shift in plans from just a few weeks ago.

The comments by Fed Governor Daniel Tarullo followed those of one of his colleagues  Monday who made "the case for watching and waiting" before the central bank hiked the so-called federal funds rate for the first time in a decade.

As recently as last month, Fed Chairwoman Janet L. Yellen said she expected a rate hike this year "unless the economy surprises us."

The surprise came about a week later with the release of a disappointing September jobs report. Yellen has stressed that the Fed would make a decision based on incoming economic data.

Asked Tuesday on CNBC-TV if he expected a hike this year, Tarullo said, "I wouldn't expect it would be appropriate to raise rates" given his expectations of where the economy is headed.

Tarullo, one of 10 voting members of the policymaking Federal Open Market Committee, is viewed as having a similar perspective on monetary policy as Yellen.

Yellen has not spoken publicly since the Labor Department reported on Oct. 2 that the U.S. economy added 142,000 net new jobs in September. The figure was well below expectations and, combined with a downward revision to August's data, showed the job market was slowing.

On Monday, Fed Governor Lael Brainard made her case for waiting on a rate hike during a speech in Washington.

Although she didn't specifically say whether she expected a hike this year, Brainard said slowing growth in China and elsewhere posed potential risks to the U.S. economy.

Yellen expects rate hike this year 'unless the economy surprises us'

"The downside risks make a strong case for continuing to carefully nurture the U.S. recovery -- and argue against prematurely taking away the support that has been so critical to its vitality," she said.

The federal funds rate has been near zero percent since late 2008 in an attempt to stimulate growth by making it more attractive to borrow than save.

Source: LA-Times