Kansas City Federal Reserve President Esther George spoke with FOX Business Network’s (FBN) Peter Barnes about raising interest rates. When asked when she thinks we will raise interest rates George said, “given what we’ve seen recently, I think we just have to wait and see.” George went on to say, “I don’t want to take too much signal from something that could turn out to be noise. I don’t want to overreact to short-term data that may not in the long term really turn out to be significant for that kind of decision.”

Esther George

Esther George on her views originally on raising interest rates sooner rather than later:

“I thought the economy was strong enough, I thought the data was moving in the right direction some months ago, I felt like the economy could begin – could take the process of normalizing. Given what we’ve seen recently, I think we just have to wait and see. I don’t want to take too much signal from something that could turn out to be noise. I don’t want to overreact to short-term data that may not in the long term really turn out to be significant for that kind of decision.”

Esther George on whether she agrees with New York Federal Reserve President Bill Dudley’s comments yesterday that China and market volatility makes raising rates in September less compelling:

“Well, anytime that you get new information in between meetings, it can complicate decision making. So certainly you have to look at the changes, the volatility we saw in the market, what new information we may have about China and take that in. The question is whether it fundamentally changes the outlook of the U.S. economy.”

Esther George on whether September is a possibility to raise interest rates:

“Well, every meeting is on the table as far as I’m concerned, and I think the committee has been clear that that’s its intention.”

Esther George on where she thinks the economy stands right now:

“So after a disappointing first quarter, it looks like we’re back on track. We’ll probably do another two percent growth. The labor markets continue to show great health, I think. We’ve had over 200,000 jobs per month for 15 of the last 17 months. That is a great find, I think.  And so as consumers spend, as they gain more confidence, as low oil prices seed through to them, my outlook is for continued growth. And I think in that context, it’s time for us to talk about normalization.”

Esther George on inflation:

“Well, when you look at why, when you look at the disinflationary pressures. So we’ve got an oil price shock that is reflected in that data. We have low import prices because of a strong dollar… So as long as expectations look like they’re staying stable, as long as that’s not feed through to the broader economy, then I think we can have – I have – reasonable confidence that we’ll get back to that target.”

Esther George on her speech in Oklahoma discussing the risks of waiting too long to start raising rates:

“Well, when rates are this low for a long period of time, you create certain incentive. And there can be mispricing of risk. There is certainly a desire to reach for yield. And if you think about the kind of accommodation, the quantitative easing was focused on asset values at the time. And so as we’ve seen housing values recover and the stock market that has grown, once you begin to talk about raising rates, you might expect volatility at some time. So my objective is to think about the long run, the sustainability of this growth.”

Esther George on whether she is on board with data dependency:

“Well, the committee has indicated they’re going to wait for the data. My own view is we’ve seen data that suggests the economy is strong enough to act. So we’ll see what happens by the September meeting. What things we’ve seen this week, how that plays out. If it’s clearer at all for what it means for the broader economy. We’ll have another jobs report…next week.”

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