Fed’s George says recent volatility hasn’t changed her views on economy

The comments by Kansas City Fed Bank President Esther George, aired on Thursday in a cable television interview, were a sign that concerns over financial market turmoil have penetrated deeply into the U.S. central bank, further reducing the likelihood of a Fed rate hike in September.

“Anytime that you get new information in between meetings, it can complicate decision making”. “I thought there was scope to consider rate increases before now, but we’ll wait and see what the committee’s thoughts are”. George went on to say, “I don’t want to take too much signal from something that could turn out to be noise”.

“So after a disappointing first quarter, it looks like we’re back on track”. The labor markets continue to show great health, I think. That is a great find, I think. So in my own view the normalization process needs to begin and the economy is performing a way that I think if prepared to take that. He also said that the case for liftoff next month could improve as more information comes in about markets and worldwide developments between now and the next FOMC meeting. “We’ve been at zero for a long time”. And there can be mispricing of risk.

George acknowledged that the Fed’s monetary policy in recent years has influenced asset values, but asserted the central bank was clear about how quantitative easing would impact markets.

“When you affect those kind of prices for a long period of time, I expect we’re going to see that kind of volatility”, she said.

As a result, the Fed will have to see what conditions look like at the time of the September meeting, George said.