February 9, 2018 / 2:01 AM / 2 years ago

Fed's George says fiscal stimulus means rate hikes important

FILE PHOTO - Kansas City Federal Reserve Bank President Esther George is pictured in the bank's boardroom in this handout photo courtesy of the Kansas City Federal Reserve. Courtesy Kansas City Federal Reserve/Handout via REUTERS

(Reuters) - The economic boost from a major tax overhaul signed into law by President Donald Trump is keeping pressure on the Federal Reserve to raise interest rates, Kansas City Fed President Esther George said on Thursday.

Speaking in Wichita, Kansas, George said it was unclear how much the fiscal changes would boost the economy but that the stimulus would come as the U.S. labor market appears to be tight, raising the risks of inflation.

“Because of that, it is important that the [Fed] continues on its current path of policy normalization with gradual increases in the target federal funds rate,” George said, adding that it would be “reasonable” for the Fed to raise interest rates three times in 2018.

Reporting by Jason Lange in Washington; Editing by Sandra Maler

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