The Federal Reserve is close to hitting its targets for US employment and 2% inflation, according to the central bank's vice chairman, Stanley Fischer. In a speech in Colorado, the Fed's number two policymaker was upbeat about the economy's recovery and prospects.
We are close to our targets, he said on Sunday, adding that jobs growth had been remarkably resilient. However he did not mention interest rates, but the remarks are likely to fuel debate about when they may rise.
Mr Fischer said this year's pace of jobs growth, although slower than in 2015, was more than enough for the labor market to continue to improve. At the conference in Aspen he said that inflation outside of food and energy prices was within hailing distance of 2%, the Fed's target rate.
In recent years, he said, the US economy had had to confront the Greek debt crisis, a rise in the strength of the dollar, and sporadic financial turbulence.
Yet, even amid these shocks, the labor market continued to improve: employment has continued to increase, and the unemployment rate is currently close to most estimates of the natural rate, Mr Fischer said.
I believe it is a remarkable, and perhaps under-appreciated, achievement that the economy has returned to near-full employment in a relatively short time after the great recession, given the historical experience following a financial crisis, he said.
One major concern, however, was the slowdown over the past few years in US productivity growth. If it persisted, Fischer said, it would curtail jobs and wage growth.
But Fischer would not comment on the path for interest rates. There has been growing expectation that the Fed will raise rates this year - as long as the economy continues to strengthen. Fischer said he expected US growth to pick up in coming quarters.
The comments come ahead of a speech that Fed chairwoman Janet Yellen is due to deliver on Friday, when she is expected to give guidance on interest rate policy. Yellen is also expected to sound a positive note. Economists said it was unlikely that Fischer would want to say anything that could be contradicted on Friday.
It would be quite an event if Fischer went out so close to Yellen's speech and said something she disagreed with, former Fed board economist Roberto Perli told the Bloomberg news agency.