Yellen speech awaited for any hint on rate timing

Published on NewsOK Modified: August 22, 2014 at 6:20 am •  Published: August 22, 2014
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WASHINGTON (AP) — Two days after the Federal Reserve revealed an intensifying internal debate over interest rates, Chair Janet Yellen will address the annual Fed conference in Jackson Hole, Wyoming, with investors seeking any clear hints of when it will start raising rates.

The subject of Yellen's remarks Friday will be labor markets, which is the theme of this year's gathering of central bankers. Minutes of the Fed's July 29-30 meeting released Wednesday showed that officials engaged in a sharp debate over whether to raise rates sooner than expected if the economy keeps strengthening.

Some officials, the minutes said, thought the Fed would need "to call for a relatively prompt move" to begin raising short-term rates from record lows, where it has kept them since the financial crisis struck in 2008. Otherwise, they felt the Fed risked overshooting its targets for unemployment and inflation.

In the end, the Fed made no changes at the July meeting. It approved, 9-1, maintaining its current stance on rates. But the minutes pointed to a distinct division among officials over the timing of an increase.

That debate has continued at Jackson Hole, with Fed officials expressing clashing views during a series of TV interviews before the conference began with a reception and dinner Thursday night.

Charles Plosser, president of the Fed's Philadelphia regional bank, said he was uncomfortable with the Fed's current policy statement that it expects to keep its key short-term rate unchanged for a "considerable time" after its bond purchases end. Plosser cast the lone dissenting vote at the July meeting.

In an interview Wednesday with CNBC, Plosser said he felt the Fed was "running a very risky policy" given the steady signs of strength in the economy.

"I would prefer to begin raising rates sooner and raise them more gradually," he said.

Esther George, president of the Kansas City Fed, which sponsors the Jackson Hole conference, said in an interview on the Fox Business Network that she also thought the Fed needed to "begin sooner rather than later" raising rates to give the economy time to adjust after a prolonged period of low rates. George, like Plosser, is viewed as a "hawk" — someone who thinks the Fed should be more concerned about avoiding high inflation than about continuing to try to boost the economy.

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