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Fed should hike rates gradually, George says in Jackson Hole

(Reuters) - It is time for the Federal Reserve to raise U.S. 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.

“I think it’s time to move,” she told Bloomberg TV as some of the world’s top central bankers gathered to consider whether monetary policy needs to be reimagined in a world of persistently low rates, inflation, and economic growth. The interview was conducted on Wednesday and broadcast on Thursday.

George, the only policymaker to dissent against the Fed’s decision last month to leave rates unchanged at the fifth straight policy meeting, said she is “not convinced” that a fundamental rethink is necessary at this point.

Investors are awaiting a speech on Friday by Fed Chair Janet Yellen for more definitive clues about whether the central bank plans to hike rates before year end. Recent comments by her Fed lieutenants, Vice Chair Stanley Fischer and New York Fed President William Dudley, that were confident about the economy have nudged market expectations of a hike in December to about 42 percent.

George, who is in the minority of Fed officials, said “we can remove some of that accommodation” as long as employment continues to improve and inflation remains low and stable.

“I do think it is time to move that rate,” she said separately on CNBC television on Thursday. “That doesn’t mean I favor high rates. It doesn’t mean I think that needs to happen rapidly. I agree (with) a gradual move in these rates.”

Reporting by Jonathan Spicer in New York; Additional reporting by Sam Forgione; Editing by Chizu Nomiyama and Jeffrey Benkoe