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Speaking to Bloomberg TV on Tuesday, vice chair of the U.S. Federal reserve, Stanley Fischer reiterated his previous views with regard to the economy, however speaking on rate cuts, Mr. Fischer toned down his previous comments and say that t will be data dependent. Below are the key highlights from the talks,
- U.S. economy is close to reaching full employment. However, despite resilient labor market, productivity, which has hit worst level in more than three decades is keeping a lead on growth.
- He pointed out that what policymakers are concerned with is not just one rate hike but the entire policy path and that will be data dependent.
- He stressed his worries on productivity and pointed that it is very hard to control by policymakers. “It depends enormously on what private individuals are doing in their companies. It is very slow at the moment,” he said.
- He added that the stronger dollar is not a drag on productivity but could be a factor in corporate profitability.
- With regard to negative rates, he said that the U.S. Federal Reserve won’t follow the examples of other central banks and dive to negative territory. He said that the academic work suggests that the negative rates work up to a certain point and then become counterproductive.
FOMC will meet next month on 20-21st, to decide on the next move.
