Fed vice chair still sees two more rate hikes this year -CNBC


UPDATE 1-Fed vice chair still sees two more rate hikes this year -CNBC

(Adds comments on Trump and French vote, policy context)
    By Jonathan SpicerApril 21 (Reuters) - The U.S. Federal Reserve remains on
track for two more interest rate increases this year despite
some weak recent economic data including a drop in inflation,
Fed Vice Chair Stanley Fischer said on Friday.
    "We're feeling that way. So far I haven't seen anything to
change that," he said on CNBC when asked whether two more policy
tightenings in 2017 were appropriate, adding the Fed is "not
tied to" that plan.
    Fischer also dismissed speculation that U.S. President
Donald Trump's comments on the dollar would sway Fed
policymaking, and warned that France's election on Sunday could
raise another question mark over an improving world economy.
    The median Fed policymaker forecast in mid-March, when the
U.S. central bank last tightened monetary policy, was for two
more rate increases by year end.
    Weaker-than expected-readings on domestic growth, monthly
inflation and retail sales in recent weeks have reinforced the
notion that the U.S. economy slowed in the first quarter, while
investors are also questioning how realistic Trump's stimulus
plans are. [nL1N1HL1GU]
    Trump's comments last week, in which he said the U.S. dollar
was "getting too strong" and suggested that Janet Yellen could
serve another term as Fed chair, helped reduce market
expectations to only one more rate hike this year. Prior to
those comments being published, traders at CME had expected two
more hikes in 2017. [nL1N1HK1SV] [nL1N1HK1Y2]
    Addressing Trump's comments on the currency, Fischer, whose
term as vice chair ends next year, said: "We do not take a
particular statement by even a president into account in making
our decisions on the interest rate."
    He noted that a recently depreciated dollar, which generally
benefits U.S. exporters, "has been of some help" to the U.S.
economy even while "that has not been part of our plan."
    Overseas economic surprises, such Britain's vote to leave
the European Union last year, have delayed the U.S. central
bank's tightening plans. The latest wild card is France's
first-round election on Sunday in which some presidential
candidates oppose the country's participation in the EU.
    "Considering that the Franco-German partnership is the
absolute center, and a vital part, of the European project, that
would be a very big thing and it would be very hard to know how
it would work out (given) you'd be entering a very unknown
world," Fischer said of the vote.
    "We pay attention to what happens abroad," he added. "We
think about what impacts it will have on us."

 (Reporting by Jonathan Spicer; Editing by Meredith Mazzilli)
 ((jonathan.spicer@thomsonreuters.com; +1 646 223 6253; Reuters
Messaging: jonathan.spicer.thomsonreuters.com@reuters.netwww.twitter.com/jonathanspicer))


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