WASHINGTON — What once seemed a sure bet — that the Federal Reserve would raise interest rates in September — appears less certain after a wild week of stock market turbulence.
The market’s ride and how the Fed will react provide the backdrop for the annual high-profile economic conference in Jackson Hole, Wyo. Fed Chair Janet Yellen will skip the meeting, so Vice Chairman Stanley Fischer is commanding top attention.
Fischer’s message: Incoming economic data and market developments over the next two weeks will play crucial roles in determining whether the Fed raises interest rates at its September meeting.
In an interview Friday with CNBC, Fischer said that before the recent market volatility, “there was a pretty strong case” for a rate hike at the Sept. 16-17 meeting. Now, the jury is out because the Fed needs to assess the economic impact of events in China and on Wall Street.
Fischer said Fed officials realize that they need to act before data requires them to hike rates to alleviate inflation: “When the case is overwhelming, if you wait that long, you will be waiting too long.”
He tried to reassure markets, as Yellen has, that when the Fed begins to raise rates, it plans to do so very gradually.
The Fed’s key rate has been at a range of zero to a quarter-point since late December 2008.
Fischer will deliver more comments on inflation in a formal speech to the conference Saturday.
