US central bank nearly where it wants to be, Fed's Fischer says

A top US central bank official voiced confidence on the economic outlook and the expected path for future interest rate hikes, but shied away from providing precise guidance.

"I don't want to give you numbers on two or three, but this is consistent with what we had thought should be happening around now -- that is that we’d be moving closer to the 2 percent inflation rate, and that the labor market would continue to strengthen," the vice-chairman of the US Federal Reserve, Stanley Fischer, told Bloomberg TV.

"If those two things happen, we’ll be on the path that we more or less expected."

If rates returned to the levels seen in previous years, that would take "a matter of years", he added.

In his interview, the policymaker also stressed the need to avoid "very high inflation" which might at some point "complicate the situation", but added "we are not there by any means".

When there is inflation significantly above 2.0%, that is when you begin to worry and then act, he explained.

As often occurs, his views appeared to be well aligned with those of his boss, Fed chief Janet Yellen.

In turn, the latter were in keeping with the median forecasts provided by the members of the Federal Open Market Committee in their most recent Summary of Economic Projections.

The SEP published on 14 December 2016 included projections for three interest rate hikes in the States over the course of 2017, with GDP seen expanding at a 2.1% pace and inflation, as measured by the PCE deflator, at 1.9%.

Speaking to the US Senate's banking committee, Yellen said: "At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate [...] Waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly."

According to Fischer, wage growth had also "started happening".

Regarding the outlook for the economy and for raising rates further after the US elections, the rate-setter said: "Only if we think that it is demand-based and threatens our inflation objective."

The new administration had yet to announce the exact details of its plans to cut taxes.

“We haven’t very much changed our view of where we will be.”