US interest rates are likely to rise further this year to keep inflation in check as labor market strength fuels income growth, Federal Reserve officials said.
Fed Governor Susan Bies and Regional Fed bank presidents Anthony Santomero of Philadelphia, Gary Stern of Minneapolis, Jeffrey Lacker of Richmond, Virginia, and Sandra Pianalto of Cleveland said in separate speeches on Tuesday rates need to increase as long as the US economy expands with steady employment gains.
"It is prudent to move the federal funds rate up to a position that gives me more confidence that monetary policy is no longer accommodative," Pianalto, 50, told the Association for Corporate Growth in Pittsburgh. "I would prefer this strategy to finding out the hard way" that inflation is on the rise.
The US central bank raised interest rates five times in as many meetings since June, lifting the benchmark overnight lending rate to 2.25 percent from 1 percent. The Fed has moved in quarter-point steps, in keeping with a phrase in policy statements to remove its low-rate policy at a "measured" pace.
"The challenge is for us to move from an expansionary policy to a more neutral policy in a manner that allows the economy to grow, but does not allow inflation to accelerate," Santomero said after a speech to the Greater Philadelphia Chamber of Commerce.
Santomero forecast economic growth of 3.5 percent to 4 percent this year, employment gains of 150,000 to 200,000 a month, and "relatively stable" prices.
The Fed's policy-making Open Market Committee next meets beginning next month. Bies, Stern and Santomero are voting members this year.
"The Federal Reserve can continue to remove its policy accommodation at a measured pace, consistent with its commitment to maintain price stability as a necessary condition for maximum sustainable economic growth," Bies, 57, said in a speech to financial executives in Baltimore, Fed officials indicated over the past few weeks they see little immediate inflation threat. Their preferred price measure, the personal consumption expenditures index, minus food and energy, rose 1.5 percent for the 12 months ending November.
Both Stern and Pianalto said that rate meets their definition of price stability.
"I don't think there is a piece of data or a set of data that says the dynamics have changed dramatically in the past few weeks," Santomero said in an interview.
Richmond Fed bank president Jeffrey Lacker, 49, told reporters after a North Carolina speech yesterday that "inflation expectations remain contained."
Still, Fed officials cite risks of rising prices, including the possibility that higher energy and commodity costs are passed through to finished goods, or that wages begin to rise as productivity rates decrease, forcing companies to hire more workers to meet existing demand.
A Ministry of Foreign Affairs official yesterday said that a delegation that visited China for an APEC meeting did not receive any kind of treatment that downgraded Taiwan’s sovereignty. Department of International Organizations Director-General Jonathan Sun (孫儉元) said that he and a group of ministry officials visited Shenzhen, China, to attend the APEC Informal Senior Officials’ Meeting last month. The trip went “smoothly and safely” for all Taiwanese delegates, as the Chinese side arranged the trip in accordance with long-standing practices, Sun said at the ministry’s weekly briefing. The Taiwanese group did not encounter any political suppression, he said. Sun made the remarks when
The Taiwanese passport ranked 33rd in a global listing of passports by convenience this month, rising three places from last month’s ranking, but matching its position in January last year. The Henley Passport Index, an international ranking of passports by the number of designations its holder can travel to without a visa, showed that the Taiwan passport enables holders to travel to 139 countries and territories without a visa. Singapore’s passport was ranked the most powerful with visa-free access to 192 destinations out of 227, according to the index published on Tuesday by UK-based migration investment consultancy firm Henley and Partners. Japan’s and
BROAD AGREEMENT: The two are nearing a trade deal to reduce Taiwan’s tariff to 15% and a commitment for TSMC to build five more fabs, a ‘New York Times’ report said Taiwan and the US have reached a broad consensus on a trade deal, the Executive Yuan’s Office of Trade Negotiations said yesterday, after a report said that Washington is set to reduce Taiwan’s tariff rate to 15 percent. The New York Times on Monday reported that the two nations are nearing a trade deal to reduce Taiwan’s tariff rate to 15 percent and commit Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to building at least five more facilities in the US. “The agreement, which has been under negotiation for months, is being legally scrubbed and could be announced this month,” the paper said,
Japan and the Philippines yesterday signed a defense pact that would allow the tax-free provision of ammunition, fuel, food and other necessities when their forces stage joint training to boost deterrence against China’s growing aggression in the region and to bolster their preparation for natural disasters. Japan has faced increasing political, trade and security tensions with China, which was angered by Japanese Prime Minister Sanae Takaichi’s remark that a Chinese attack on Taiwan would be a survival-threatening situation for Japan, triggering a military response. Japan and the Philippines have also had separate territorial conflicts with Beijing in the East and South China
RSS