But not all Fed policymakers are on board for a rate hike soon.
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Only 21 percent of market participants see the Fed raising its target rate to 50-75 basis points when it meets on September 20-21, according to the CME’s FedWatch Tool. It last raised rates from near-zero levels in December in its first hike in almost a decade.
“The case is strengthening” for a rate hike, Dallas Fed President Robert Kaplan said on CNBC TV.
Relying on interest rate policy in a future crisis would be “far superior” to alternatives such as more quantitative easing or using fiscal policy, Goodfriend said.
Wittmann said there was still time for the Fed to strike twice this year.
The decline in the level of the neutral rate of interest globally and the inability of banks who have raised short-term interest rates since the crisis to sustain them necessitate such a rethink, he said. You can not stimulate growth just by monetary policies alone, so you need fiscal policies, structural policies.
George said the economy moved slower through the first half of the year but “there is every reason to think that we could see a 2 percent economy for this year as a whole”, she said, and argued that the economy could still see a 3 percent growth in the second half.
Of interest, he thought the Fed’s current forecast for a larger number of rate hikes, even if gradual, was damaging its credibility and affecting pricing in foreign exchange markets.
Investors are awaiting a speech on Friday by Fed Chair Janet Yellen for more definitive clues about whether the central bank plans to hike rates before year end.
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However, Wittmann told CNBC: “US domestic economic conditions clearly warrant a hike and the global landscape is now calmer than before”.
