The Federal Reserve should promptly end its easy monetary policy and press ahead with an interest rate hike, followed by a set of gradual moves higher, the head of the Dallas Fed said on Monday in his final speech as a policymaker.
Richard Fisher, president of the Dallas Federal Reserve Bank, shrugged off stagnate wage growth, calling it a lagging indicator, and said inflation will bounce back once energy prices stabilize.
Fisher, an outspoken former banker and U.S. Treasury official who has repeatedly called for the Fed to move faster with a rate hike, is stepping down this month after 10 years at the U.S. central bank.
Despite the views from Fisher and other policy hawks, the Fed has kept rates at near zero since December 2008.
The Fed has signaled that it is prepared to hike rates later this year, with June to September the expected time frame.
"The idea that we can substitute a steeper future funds-rate path for an early liftoff seems risky to me," Fisher said in remarks prepared for delivery at Rice University in Houston. "I would rather the FOMC raise rates early and gradually than late and steeply."
The Federal Open Market Committee is the Fed's policy-setting body.
Fisher said that if the economy keeps growing at its current pace, the jobless rate will be around 4.5 percent at year-end. At that rate, it would be the lowest unemployment level since May 2007.