By Ann Saphir
(Reuters) – The Federal Reserve should start raising short-term interest rates next year, lifting them gradually to 3 percent by the end of 2016, a top Fed policymaker known for his hawkish views said on Tuesday.
Philadelphia Federal Reserve Bank President Charles Plosser also said he expects the Fed’s bond-buying program to end by November, and would like to see interest rates at 2 percent by the end of next year.
WASHINGTON (Reuters) – Minneapolis Federal Reserve Bank President Narayana Kocherlakota, whose differences with Fed Chair Janet Yellen over rewriting the central bank’s pledge to keep interest rates low led him to cast the sole dissenting vote on Fed policy last week, has no plans to make a habit of saying “no,” people familiar with his thinking say.
The Fed had pledged since December 2012 not to even consider raising rates until unemployment falls to 6.5 percent, a move designed to assure investors that rates would stay low even as the economy improved. Kocherlakota liked the approach, but lobbied his colleagues to go further by pledging low rates until unemployment rate falls to 5.5 percent, as long as inflation stays in check.
WASHINGTON (Reuters) – The European Central Bank will not tie interest-rate policy to specific economic thresholds, a top policymaker said on Saturday.
“We think it would not be useful,” ECB Vice President Vitor Constancio said on Saturday, referring to the threshold-based approach to monetary policy that the U.S. Federal Reserve abandoned this week after using it for just over a year.