Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Fed Officials Say Rate-Hike Criticism by Trump Won't Sway Policy

(Bloomberg) -- Two regional Federal Reserve bank chiefs said they favor further interest-rate increases and criticism by President Donald Trump wouldn’t influence U.S. central bank policy.

“My own forecast is that it will be appropriate to raise rates a couple more times this year,” Kansas City Fed President Esther George said in an interview on Bloomberg Television with Kathleen Hays in Jackson Hole, Wyoming. Robert Kaplan, head of the Dallas Fed, told CNBC television that he backed three or four more hikes over the next nine to 12 months.

Trump complained to wealthy Republican donors at a Hamptons fundraiser on Friday that he expected Jerome Powell to be a cheap-money Fed chairman and instead the man he picked for the job had raised rates.

Both George and Kaplan, speaking ahead of the Kansas City Fed’s policy symposium in the Grand Teton National Park, said political considerations wouldn’t play any role in the committee’s interest rate setting policies.

“I don’t feel personally that it impedes our ability to make decisions,” George said. “This committee is very focused on the mandate given to us by Congress to try to make decisions that are in the long-run interest of a growing economy.”

Kaplan agreed with that assessment.

“It’s not going to affect our decisions,” the Dallas Fed leader said. “I’m very confident we’ll continue to do our job in an apolitical way.”

George, as conference host, will get the event formally underway with a dinner at 8 p.m. New York time on Thursday. Powell headlines the conference with a speech at 10 a.m. Friday on monetary policy in a changing economy.

September Hike

Fed officials are getting ready to raise interest rates again next month amid an intensifying debate on how much higher to go amid strong labor markets and robust growth, minutes of their July 31-Aug. 1 meeting released in Washington on Wednesday showed. Investor expectations for a move next month are above 90 percent, according to pricing in interest rate futures markets.

The U.S. economy expanded 4.1 percent in the second quarter and tracking indices from the New York and Atlanta Feds show it continues to grow. Unemployment is 3.9 percent, near the lowest since 2000, and inflation measured by the Fed’s preferred price gauge rose 2.2 percent for the year ending June.

George suggested the more difficult debates facing the Fed revolve around how far it will raise rates before at least pausing its upward march. George said she estimated the so-called neutral rate -- the level at which the Fed’s policy rate neither drives nor restrains the economy -- at 3 percent. She wouldn’t say where she thought rates should level off.

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