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The United States is in a "good place" with inflation, but it is too soon to say when the Federal Reserve will raise interest rates, a top Fed official said on Tuesday.
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Jeffrey Lacker |
Richmond Federal Reserve President Jeffrey Lacker told CNBC that the risk of deflation had diminished substantially, but cautioned that the nation could see a growing risk of inflation over the next few years.
"I think we're in a good place with inflation right now. The risk of deflation, pronounced fall in (the) inflation rate, has diminished substantially since the beginning of the year," Lacker said. "As the economy proceeds, maybe not next year, we could see a growing risk of significant increases in inflation."
Lacker also said that the U.S. Federal Reserve has the tools to withdraw the support it is giving the economy and can reduce the size of its balance sheet even before it begins to raise rates on reserves.
He said that the economy should continue to gradually stengthen, and that he believed the decline in consumer spending had bottomed and not because of government stimulus.
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