(July 10): U.S. inflation is unlikely to surge anytime soon, though keeping interest rates too low for too long creates risks for financial stability, Kansas City Federal Reserve Bank President Esther George said on Wednesday.
Speaking in Helsinki, George said that inflation expectations, which have recently been falling, could change quickly if, say, investors or the public more generally became alarmed about rising government spending on an aging population.
“They can move quickly,” said George. “It doesn’t look like it will happen in the near term, but I never say never ... because you don’t know how those expectations might shift.”
Fed policymakers are widely expected to cut interest rates later this month for the first time since 2008 to help boost growth in the face of growing uncertainties around international trade and weak inflation in the United States.