Two Fed Officials Say Rate-hike Pace May Not Always Be Gradual

By Greg RobbMarketWatch Pulse

Two Federal Reserve officials said Thursday that the U.S. central bank might not be able to stick to its pledge of gradual rate hikes once they start raising interest rates. In comments to reporters after speeches at the Cato Institute, Richmond Fed President Jeffrey Lacker said the Fed's pledge to move at a gradual pace was simply a forecast. St. Louis Fed President James Bullard said he expected the Fed would not hike rates as fast as they did in 1994 or between 2004 and 2006 but added the Fed would have to respond and hike at a faster pace if the economy showed marked improvement. Both Lacker and Bullard said that their "dots," or expected level of interest rates, are higher than the Fed's median forecast in the dot plot of 1% by the end of 2016.

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