Federal Reserve Bank of Cleveland President Sandra Pianalto said she is “comfortable with the current stance of monetary policy” and expects the economy will expand at a 2.5 percent rate this year and 3 percent next year.
Inflation will probably be about 2 percent for “the next few years,” Pianalto said today in a speech in Cleveland, according to prepared remarks. Achieving maximum employment may take four to five years “if the economy grows at the moderate pace that I am anticipating,” Pianalto said.
Pianalto, who is a voting member of the policy-setting Federal Open Market Committee this year, said changes to the economic outlook may prompt an increase in the benchmark interest rate “sooner or later than late 2014.” Fed Chairman Ben S. Bernanke told lawmakers yesterday that interest rates will probably stay low at least through late 2014.
“I would prefer nothing more than to support an increase in interest rates before late 2014 on the basis of a brighter outlook for economic growth,” Pianalto said in a speech to the City Club of Cleveland. “But I’m not there yet.”
The current policy is “already quite accommodative” both in terms of interest rates and the size of the central bank’s balance sheet, she said. Additional monetary stimulus could spur inflation, while less action by policy makers “could risk weakening an already slow expansion” and cause disinflation, she said.
To contact the reporter on this story: Jeff Kearns in New York at email@example.com
To contact the editor responsible for this story: Chris Wellisz at firstname.lastname@example.org