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Fed officials tell activists rate hikes won't derail economy

26 August 2016 03:28 (UTC +04:00)

Baku-APA. An unusually large group of Federal Reserve policymakers appeared before activists on Thursday and defended their plans to raise interest rates to keep the U.S. economy from overheating, APA reports quoting Reuters.

Several policymakers said raising interest rates gradually would allow them to stimulate the economy for longer, but that an overheating economy could end in steep rate increases and a recession.

"It's not about trying to stop the economy from growing," San Francisco Fed President John Williams told about 100 members of the Fed Up coalition of union organizers and community activists ahead of an annual meeting of global central bankers and academics. "We're going to keep this economy growing, we are going to run it hot."

"My objective is not to slow down the economy," said Esther George, president of the Kansas City Fed.

Fed policymakers have yet to make a decision on when to raise rates again after lifting them in December for the first time in nearly a decade. Much of their public commentary in recent weeks suggests they are moving closer to a hike. Both Williams and George have recently argued U.S. employment and inflation have improved enough to justify more rate increases.

But the activists, who met with 11 Fed policymakers in an unprecedented open meeting ahead of the Kansas City Fed's annual global central banking conference, used catcalls and applause to signal they were not buying it.

Years of lackluster wage gains and underemployment have left many Americans feeling left out of the country's economic recovery despite a 4.9 percent jobless rate.

Unemployment rates for African Americans are still about twice as high as those for whites, government statistics show.

Raising rates at this point in the recovery, said Rod Adams of Minneapolis, means "You'll be leaving us behind, pulling up the ladder right after you've climbed it."

The meeting, billed by organizers as a polite "listening session" for exchanging ideas, turned out to be a tough grilling for the Fed policymakers, who rarely appear in public in such numbers.

Fed officials worry that leaving rates too low for too long could stoke nascent inflation, forcing the Fed to raise rates aggressively.

"One of the key goals should be that we don't have another recession," said Boston Fed President Eric Rosengren, who has been among the most dovish of Fed policymakers.