Fed’s George Says Rate-Hike Criticism by Trump Won’t Sway Fed

(Bloomberg) -- Federal Reserve Bank of Kansas City President Esther George favors two additional interest-rate increases this year as long as the U.S. economy continues to gradually improve, adding that criticism by President Donald Trump will not influence the U.S. central bank.

“My own forecast is that it will be appropriate to raise rates a couple more times this year,” George told Kathleen Hays in an interview on Bloomberg Television in Jackson Hole, Wyoming.

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.

George said she wasn’t feeling any political heat.

“I don’t feel personally that it impedes our ability to make decisions,” she 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.”

George hosts the Kansas City Fed’s annual policy symposium in Wyoming’s Grand Teton National Park and will get the event formally underway with a dinner at 8 p.m. New York time. 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 at a 4.1 percent pace in the second quarter and tracking indices from the New York and Atlanta Feds show it continues to grow. Unemployment is 3.9 percent, 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.

To contact the reporter on this story: Christopher Condon in Jackson Hole, Wyoming at ccondon4@bloomberg.net

To contact the editors responsible for this story: Alister Bull at abull7@bloomberg.net, Chris Bourke

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