Federal Reserve Board Governor Daniel Tarullo:

  • The modest pace of U.S. economic growth in recent years suggests that when the time comes to raise interest rates the Federal Reserve will be able to do so gradually without fear of a sudden surge in inflation
  • “It seems less likely that we will experience a growth spurt in the next couple of years that would engender concerns about rapid wage pressures and changes in inflation expectations”
  • Said monetary policy could lay the groundwork for improving the potential growth rate by reducing labor market slack
  • It is difficult to know just how much slack there is currently in the labor markets … “We are well advised to proceed pragmatically”
  • Fed should be attentive to signs that wage pressures are rising, “We should not rush to act preemptively in anticipation of such pressures based on arguments about the potential increase in structural unemployment in recent years”

via Reuters, comments from Tarullo’s prepared text at the Hyman P. Minsky Conference on “Stabilizing Financial Systems for Growth and Full Employment” in Washington

He will take audience questions after.