September might be a good time to raise rates, Fed’s Bullard says

It is time for the Federal Reserve to raise USA interest rates gradually, given progress on employment and inflation, Kansas City Fed President Esther George said in television interviews, kicking off a high-profile conference in Jackson Hole, Wyoming, with a cautiously hawkish view.

George said she would support paring down the Fed’s $4.5 trillion balance sheet by first stopping reinvestment of maturing securities.

“It is only a matter of time before another cyclical downturn calls for aggressive negative nominal interest rate policy actions”, concludes Marvin Goodfriend, a professor of economics at Carnegie Mellon University and a former policy adviser at the Richmond Federal Reserve bank.

Mester said the September meeting of Fed policymakers is a “live” meeting, meaning it’s possible a rate increase could be on tap.

“I think, in the not so distant future. we are moving toward being able to take another step”, he said on a possible rate hike, while declining to say when he believed it would come. “That doesn’t mean we are behind the curve now but I do think that it makes sense to be starting to move interest rates up on that gradual path”.

The U.S. economy added 255,000 jobs in July and 292,000 in June, rising the three-month average to 190,000 from 147,000.

“We’re beginning to see wage growth in a way that suggests that the consumer is going to be in a good position to spend”, George said.

In remarks to CNBC, St.Louis Fed president James Bullard reportedly reiterated his forecast for just one interest rate hike over the coming two-and-a-half years.