A later liftoff from near-zero interest rates will better help the U.S. economy, and the best time for a rate hike may not come until the middle of next year, a top Federal Reserve official said Monday.
In prepared remarks at Marquette University, Chicago Federal Reserve President Charles Evans contended normalizing policy too early brings risks amid pressure on inflation from low energy prices and "subdued" wage growth. However, he told reporters after the speech that the central bank is "not far" from its first rate increase in nearly a decade.
The Fed's policy-making committee held off on raising its short-term interest rate target at its September meeting amid rocky stock markets and concerns about a global slowdown. Evans—who is a voting member on the committee—contended the Fed would need to normalize gradually after the first hike to avoid shaking markets further. He called three hikes of 25 basis points "appropriate" by the end of the next year.