Taylor says Fed may need to raise rates soon
Former U.S. Treasury official John Taylor said Tuesday the Federal Reserve may have to raise interest rates soon.
Taylor, who worked as undersecretary of the Treasury for international affairs in the Bush administration, disagreed with the Fed’s loose monetary stance, he wrote in prepared remarks ahead of a speech in a conference hosted by the Federal Reserve Bank of Atlanta.
“My calculation implies that we may not have as much time before the Fed has to remove excess reserves and raise the rate,” he said, according to Reuters.
“We don’t know what will happen in the future, but there is a risk here and it is a systemic risk,” he added.
He said the Fed’s growing balance sheet represented a “systemic risk.” He also suggested that using his calculations, the Fed should set the Fed funds rate at 0.5 percent. The current rates are between zero percent and 0.25 percent.
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