Federal Reserve Vice Chairman Richard Clarida said Friday that the U.S. economy is strong and interest rate policy is an appropriate place to support growth.
Speaking at the Hoover Institution Monetary Policy Conference at Stanford University, Clarida endorsed the Fed's recent policy switch to "patience" in terms of implementing future rate hikes, and to data dependence as opposed to being on a preset course.
"The U.S. economy is in a very good place," the central bank official said in prepared remarks. "The unemployment rate is at a 50-year low, real wages are rising in line with productivity, inflationary pressures are muted, and expected inflation is stable."
Along with those conditions, the Fed's benchmark funds rate is around the level that policymakers consider neutral — neither stimulative nor restrictive for growth.
Clarida spoke just a few hours after the Labor Department reported another strong month for job growth, with nonfarm payrolls increasing by 263,000 and the unemployment rate falling to 3.6%, the lowest since 1969. That jobless rate, he said, is right around what is considered full employment.
"So with the economy operating at or very close to the Fed's dual-mandate objectives and with the policy rate in the range of FOMC participants' estimates of neutral, we can, I believe, afford to be data dependent ... as we assess what, if any, further adjustments in our policy stance might be required to maintain our dual-mandate objectives of maximum employment and price stability," he said.
Earlier in the week, the policymaking Federal Open Market Committee voted to hold the funds rate steady in a targeted range of 2.25% to 2.5%. Fed Chairman Jerome Powell said he doesn't see the need for rate hikes or cuts anytime soon, as he noted that he expects low inflation readings to rebound back to around the central bank's 2% goal.