The Federal Reserve expectations of three rate hikes this year still stand, Federal Reserve Board Vice Chair Stanley Fischer said in a televised interview Friday.

When asked if two more rate increases were still the expectation, Fischer said in an interview on CNBC, “We’re feeling that way. So far we haven’t seen anything to change that.”

Federal Reserve Board Vice Chair Stanley Fischer.
Federal Reserve Board Vice Chair Stanley Fischer. Bloomberg News

But he noted, it depends on how the economy progresses. “We’re not tied to three. We weren’t tied to four [last year] and four became one.”

Positive economic changes occurred in much of the world and he’s “upbeat” about the global economy.

Although many economic indicators were weak in the first quarter, Fischer wrote it off, noting, “There were weak first quarters the past three years.” He called declines in inflation “transitory” and said the rest of the year should be “around forecast.”

He cited energy prices and cell phones as the culprits for the recent drop in inflation and called it “a one-time shock, we believe, which will not reduce inflation.”

A reduction in the Fed’s balance sheet, Fischer noted, “will have an impact similar to tightening interest rates.” He said the Fed is aware of that and will “take it into account.” While the Federal Open Market Committee has discussed reducing the balance sheet, Fischer said, they plan to decide how to proceed by the end of the year and will announce a plan when one is finalized.

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.