The Federal Reserve won’t raise rates for years, former central bank governor and Columbia University economics professor Frederic Mishkin told CNBC.
“We’re going to have a tremendous amount of slack in the economy for quite a number of years,” he said. “If there’s still a lot of slack there’s no reason to raise rates. In fact, it would be a big mistake.”
Professor Mishkin talked also about the state of the economy during his live interview. According to him, “the most important thing is it looks like we’ve dodged a bullet. The recession looks like it’s over, a sustained recovery is getting into place…Nonetheless,” he said, “there are still a lot of problems in the financial sector that are going to take a long time to work out.”
Talking about inflation, Mr. Mishkin, who served on the Fed from 2006 to 2008 and was a proponent of the central bank setting specific targets for inflation, said inflationary pressure expectations are well grounded. He however, recognized that an acceleration in growth could change the Fed’s perspective but said strong inflation is unlikely.
