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Outgoing Dallas Fed Chief Calls For Prompt Interest Rate Hike

Richard Fisher’s speech in Houston on Monday night was his final public address before his retirement on March 19.

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fisher-richard400px-310px-tn.jpgRichard Fisher. Image courtesy of the Federal Reserve Bank of Dallas

 

Richard Fisher delivered his final speech as head of the Federal Reserve Bank of Dallas Monday night. Speaking at Rice University’s Baker Institute, Fisher called on his Fed colleagues to raise interest rates, sooner rather than later, to head off inflation.

In his farewell address, Fisher said he understood the temptation to hold off raising interest rates. It’s been a long, slow recovery, and even with trillions of extra dollars sloshing around in the financial system, inflation is still low for now. So why not wait until the U.S. economy has achieved full employment?

“Every time in its history that the Federal Reserve has tightened monetary policy after achieving full employment, it has driven the economy into economic recession,” Fisher said. “It’s because of this dynamic and my desire to prolong the current expansion that I have argued that we should begin reducing policy accommodation earlier than many of my colleagues on the [Federal] Open Market Committee appear to wish.”

Fisher has long been regarded as an “inflation hawk” at the Fed, arguing that central bankers should focus on holding down inflation and leave the role of promoting economic growth to elected officials. He’s served nearly ten years as president and CEO of the Dallas Federal Reserve Bank. He retires on March 19.