For the second time in as many days, a member of the Federal Reserve’s Board of Governors has warned that raising interest rates this year would be a mistake.
Daniel Tarullo, a Fed governor who was appointed by President Obama, said Tuesday in an interview on CNBC that he “wouldn’t expect it to be appropriate to raise rates” in 2015, given his outlook for the economy.
Tarullo also appeared skeptical of the idea that further job growth will push inflation up toward the Fed’s 2 percent target. The fact that inflation hasn’t picked up and remains near zero, he said, indicates that “we don’t have an enormous amount of momentum even though we’ve made a fair amount of progress.”
Another Fed governor, Lael Brainard, issued a similar assessment of the strength of the economy and the need for monetary stimulus on Monday.
Both governors now appear to be in public disagreement with Federal Reserve Chairwoman Janet Yellen, who has said in her most recent comments that she still believes a rate hike likely will be justified this year.
The Fed has two more meetings in 2015 in which members could raise the target interest rate, which has been set at zero since 2008.
In recent monetary policy announcements, the Fed has said that it will base the decision to begin raising interest rates on whether job growth continues and indications point to inflation rising to the central bank’s 2 percent target.
Over the past decade, it has become almost unheard-of for members of the Board of Governors to disagree with the chairman about monetary policy.
The last time a governor dissented from a monetary policy decision was 2005.
