Fed’s Tarullo Signals Patience on Rates for More Inflation Cues

(Bloomberg) -- Federal Reserve Governor Daniel Tarullo signaled he’s willing to be patient before deciding the economy has enough momentum to raise interest rates, while declining to rule out the possibility that he and his colleagues could move before the end of the year.

“I wouldn’t foreclose that possibility,” Tarullo said on CNBC when asked about a 2016 rate increase. “It’s important for all of us, in going into each meeting, to remain open to the possibility that momentum has changed, that expectations have changed, and thus for us to change our own views.”

Tarullo declined to discuss the specific timing for any rate increase. While he emphasized that the economy shows some signs of strength, such as robust consumer spending, the labor market has been basically flat and inflation has only ticked up. He called himself a member of the “show-me” camp inside the Fed, referring to those who want to see more evidence of inflation.

“Regardless of what measure you use, from my point of view, what is optimal right now is to look to see actual evidence that the inflation rate would continue to go up and would be sustained at around the target,” Tarullo said. “We’ve had so many false up and downs in the past.”

The policy-setting Federal Open Market Committee meets Sept. 20-21 in Washington. Tarullo’s colleague, Governor Lael Brainard, will speak in Chicago on Monday before Fed officials enter a period of public silence heading into a rate decision.