July 16, 2014 / 12:06 AM / in 4 years

Fed's George says strengthening economy warrants quick rate rise

WASHINGTON (Reuters) - A strengthening U.S. economy and job market means the Federal Reserve should begin raising interest rates “relatively soon,” Kansas City Federal Reserve Bank President Esther George said on Tuesday.

At comments delivered in Kansas City, Missouri, George said that by many measures, including a recent rise in rent and food prices, and strong hiring reports, the Fed should have already lifted interest rates from the zero level. Not moving soon risked creating problems, George said, adding the Fed’s continued low interest rates may already be encouraging “excess” in financial markets.

“These patches of potential excess paint a picture of financial markets that have become overly conditioned on high degrees of monetary accommodation,” George said.

“Getting interest rates off zero relatively soon is not only appropriate in terms of current economic conditions, but also will allow the Fed room to maneuver in the future should economic activity slow,” she added.

Her comments contrasted with remarks earlier in the day from Fed Chair Janet Yellen, who told a U.S. Senate committee that labor markets remained weak, and that the Fed should continue bolstering the economy until wages pick up and workers return to the labor market.

Reporting by Howard Schneider; Editing by Peter Cooney

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