Federal Reserve officials urge caution on rate rises

Dow Jones Industrial Average Across the Last Month Source TradingView

Dow Jones Industrial Average Across the Last Month Source TradingView

The Federal Reserve can wait and use the first half of this year to assess growing risks to the otherwise solid USA economic outlook, an influential regional Fed president said on Wednesday, even as he stuck by an expectation to eventually raise interest rates a bit into restrictive territory.

The timing is "less clear" now due to a contrast between the solid U.S. economic data and the fears of a possible downturn amid rising trade confrontations displayed by financial markets and expressed by businesses, according to the report.

The prospect of rising interest rates that could slow the economy spooked investors and contributed to the downturn in U.S. and global stock markets late past year.

"We've got a good level of the policy rate today" and there's no urgent need to go higher, James Bullard, a voting member this year on the Federal Open Market Committee, said in an interview with the Wall Street Journal published Wednesday.

However, "recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier".

The U.S. central bank hiked rates last month to a range of 2.25-2.5 percent, its fourth policy tightening of 2018, and policymakers' forecasts pointed to about two more hikes this year.

The officials pledged to continue to monitor financial markets for signals about potential risks.

"If the economy slowed down more than we thought, or the inflation outlook deteriorated more than I'm suggesting here, there might be grounds for a little bit lower (federal funds) rate in that scenario", Bullard said.

The next meeting of the FOMC is scheduled for January 29-30.

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