Fed's Fischer refrains from remarks on immediate policy outlook

Contrary to the hopes of market participants, Fischer did not make any remarks about the immediate outlook for policy.

However, like some of his counterparts on the FOMC recently, his comments hit upon an increasingly important topic, the need for Capitol Hill to do its part in fostering more rapid and stable economic growth.

Fischer's speech was highly theoretical and centred on the difficulties of measuring the so-called output gap in the economy (how far above or below the potential rate of growth the economy was growing).

Likewise, estimates of the natural and long-term interest rates for the economy - different measures of the interest rate that the Fed should aim for - were subject to uncomfortable, but unavoidable, margins of error, Fischer said.

One thing however was very clear, fiscal variables such as infrastructure spending and taxation were important in attaining higher rates of potential growth, Fischer said.

"In particular, faster trend growth would increase the long-run equilibrium interest rate, and what we need most, now that we are near full-employment and approaching our target inflation rate, is faster potential growth," he said.

In plain English, a higher potential rate of growth means that the Fed could raise interest rates, indeed, it would be left with no other choice, without having a negative impact on levels of employment.

As of 17:13 BST fed funds futures were assigning odds of 26.3% to the probability of a Fed rate hike at its next meeting on 15 June.