More doubt cast on US rate rise as Fed governor Daniel Tarullo says it would not be "appropriate"

James Nickerson
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Tarullo said some Fed officials have warned rising rates too soon could cause more damage than waiting too long (Source: Getty)

Another governor at the Federal Reserve has said that interest rates should not rise this year, as the timing is not right for the economy to support the decision.

Speaking to CNBC, governor Daniel Tarullo said: "I wouldn't expect it would be appropriate to raise rates."

Instead of raising rates this year, the Fed needs to wait for "tangible evidence" that the timing is right, including signs of inflation moving towards the Fed's two per cent target and wages rising.

Read more: US Federal Reserve September meeting minutes - Members worried about low inflation

At the moment, there is a "good bit of uncertainty" stemming from global trends, low energy prices and a stronger US dollar which are adding pressure to inflation, that mean the timing is not right, according to Tarullo.

Tarullo, who is a voting member of the Federal Open Market Committee, made his comments the day after fellow governor Lael Brainard said this was a time for "watching and waiting", not risking a rate rise when economic indicators remain weak.

Earlier this year it was widely expected that the Fed would raise interest rates, however this has been dampened by global growth concerns, as China and emerging markets appear to be slowing by more than previously thought.

Read more: Janet Yellen reiterates US on course to hike interest rates this year

Most recently the Fed held off raising interest rates in September due to concerns of low inflation, as "recent global economic and financial developments" which had slightly restrained "the economic outlook and placed further downward pressure on inflation in the near term".

Meanwhile, Fed chair Janet Yellen said in September that an interest rate rise was still on course to take place this year, but vice chair Stanley Fischer said yesterday that a rate rise this year was "an expectation, not a commitment".

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