Federal Reserve Vice Chairman Stanley Fischer said the U.S. central bank delayed raising interest rates last month to “take time to appraise” what slower growth in China means for U.S. inflation and growth and acknowledged global developments now weigh more heavily on monetary policy than was traditionally the case.
“The Fed has in the past paid less attention to global developments,” he told CNN International in an interview Friday in Lima, where he is attending a meeting of the Group of 20 major industrialized nations. “But the United States is increasingly integrated into the world economy — as are all other countries — and we’ve now reached the stage where what happens abroad does matter for the United States.”
Fischer’s comments follow remarks from several other officials Friday including New York Fed President William C. Dudley, who told CNBC he still expects to raise rates this year, provided that his outlook for inflation and growth stays on track.
Fischer was not asked directly when he thought the Fed should act, though he said “we are not going to do it at a time that is not suitable for the United States economy.”
Officials last month delayed raising the benchmark interest rate from a range of zero to 0.25 percent, where it’s been since the end of 2008, to see if slower Chinese growth undermines their forecast that U.S. inflation will move back to the Fed’s 2 percent target, minutes of the meeting released Thursday showed. Fed Chair Janet Yellen said in a speech a week after the Sept. 17 FOMC decision that she expects conditions will warrant a rate rise before the end of the year.
“We need to be confident that over the course of time, a couple of years, inflation will return to the 2 percent target,” Fischer said. The Fed’s preferred gauge of price pressures rose 0.3 percent in the 12 months through August and has been below their goal since April 2012.