Several Fed officials ready to raise rates

Several Federal Reserve officials suggested in separate remarks on Thursday that they were ready to start raising the central bank’s benchmark interest rate in December. But they emphasised that they wanted to move slowly and cautiously because the economy remained unusually weak.

William C Dudley, the president of the Federal Reserve Bank of New York, was the first to signal, in late August, that the Fed would not raise rates at its September meeting, and he said on Thursday that his reasons for hesitation had receded. He said he now saw a stronger case for the Federal Open Market Committee, the Fed’s policymaking body, to raise rates.

“I think it is quite possi- ble that the conditions the committee has established to begin to normalise monetary policy could soon be satisfied,” Dudley told the Economic Club of New York. He said he viewed the risks of acting too soon and waiting too long as “nearly balanced.” The Fed has held interest rates near zero since December 2008 to stimulate economic activity by encouraging risk-taking by investors and borrowing by businesses and consumers. Raising rates would begin to reduce that effect. Indeed, as investors anticipate liftoff, borrowing costs have already started to rise. Two officials on opposite ends of the Fed’s internal debate indicated in separate speeches that they could accept the combination of a December liftoff followed by a slow pace of rate increases. But their speeches also highlighted emerging differences about pacing.