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MNI BRIEF:Clarida-Prices Must Slow To Keep Expectations Stable

MNI (Ottawa)
(MNI)

Fed Vice Chair says he's comfortable with inflation expectations where they are now.

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Federal Reserve Vice Chair Richard Clarida said while inflation expectations are at a good level now after exaggerated weakness last year, price gains need to slow to around 2% so expectations remain in check.

“I'm comfortable now where inflation expectations are,” Clarida said Tuesday in a talk with Cleveland Fed President Loretta Mester. “Price stability, this is about well-anchored inflation expectations, and so getting actual inflation, you know, down close to 2 is going to be an important part of keeping those expectations anchored.”

The inflation goal for raising near-zero interest rates has been met and the FOMC's last dot plot showing a split on hiking next year is consistent with monitoring the other goal on full employment, he said. “There have been enormous improvements in the labor market," Clarida said, and "wage gains are healthy, but they're not out of line with the productivity we're seeing in the economy.”