Interest rate increases depend entirely on data, Fed´s Fischer says
The US Federal Reserve vice chairman Stanley Fischer has said that any decision taken on interest rates must be taken based on economic data.
Speaking to Bloomberg TV, Fischer also commented that the US was close to full employment, but was constrained in terms of productivity growth.
Chairwoman Janet Yellen remarked on 26 August that the case for a rate hike has strengthened in recent months, and it looks increasingly likely that the rates will be increased before the end of the year.
Indeed, in remarks made to CNBC on that same day Fischer even left the door open to the possibility of two more hikes before the end of 2016.
When asked by Bloomberg presenter Tom Keene whether he and Yellen had the ability to set a specific course for policy at the outset of a tightening cycle, Fischer said “the work of the central bank is never done, and I don’t think you can say ‘one and done or several’ and that’s it. [...] it depends entirely on what is happening in the economy"."
"We can choose the pace, but we choose the pace on the basis of economic data," Fischer said.
The Fed vice chair added that any decision taken will be made with a view to the rest of the world, not only the direct consequences for the United States.
"The world is becoming increasingly inter-connected, particularly the capital markets of the world, so what we do affects many other countries. It's also true that what they do affects us."
Pessimism surrounding growth appeared to be holding back the economy, according to Fischer, but he also affirmed that the jobs market was in a very healthy state.
The US is "very close to full employment", Fischer said, but "the problem is largely about productivity growth, something which is very hard to control."
The Federal Reserve will meet next month to discuss whether the time is right to raise interest rates for only the second time since 2006.
During the same Bloomberg interview, Fischer referenced research which pointed to negative interest rates´ efficacy having a threshhold, after which point they are counterproductive.
However, there were four of five central banks which believed they were "quite sucessful", possibly with the exception of Japan.
Bloomberg also reported that Fischer had stated the US would not be going down the path of negative interest rates.