A debate within the Federal Reserve over the outlook for U.S. inflation burst into public view just days after a rate-setting meeting in Washington, with one central banker saying inflation weakness is fading and another suggesting he’s nervous it won‘t.
Both New York Federal Reserve Bank President William Dudley and Chicago Fed President Charles Evans said they believe the U.S. economy’s fundamentals are sound, and both said they support gradual rate hikes ahead.
But while Dudley reinforced Fed Chair Janet Yellen’s confident tone at the close of last week’s meeting that inflation is set to rise back to the Fed’s 2-percent target, Evans sounded much less certain.
Dudley cited the soft dollar and strong overseas growth among the reasons he expects slightly above-average U.S. economic activity and a long-sought rise in wages.
Evans for his part appears less anxious to tighten policy in the face of price readings that have sagged since February, despite strong jobs growth.
Futures traders give a December rate hike about a 72-percent probability, according to Reuters data.
Both policymakers nodded to the three devastating hurricanes that have struck parts of the U.S. south and the Caribbean, noting their effects will likely make it more difficult to interpret economic data in coming months.
Reference: Reuters
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