Former Federal Reserve Chairman Ben Bernanke said weighing the effect of the slowing global economy will be key to the U.S. central bank’s decision on when to raise interest rates.
“She’s got some tough calls,” Bernanke said in an interview aired Sunday on CNN’s Fareed Zakaria GPS, referring to Fed Chair Janet Yellen. “The tough decision that she and her colleagues have to make is, is there enough domestic momentum to keep us moving forward despite these drags from abroad.”
The world’s largest economy has recently shown evidence it is “pretty strong,” said Bernanke, citing the housing sector, auto sales and consumer spending. Even so, Yellen, who succeeded Bernanke in 2014, will have to consider weakness in emerging markets, including China, he said.
Fed policy makers are debating whether to raise rates for the first time in nine years, amid signs the global economy is losing steam. A slowdown in emerging markets driven by weak commodity prices forced the International Monetary Fund this month to cutits outlook for global growth in 2015 to 3.1 percent, the weakest since 2009, from a July forecast of 3.3 percent.
Bernanke declined to say when he thinks the Fed should raise rates. “I was her predecessor, and I certainly don’t want to cause her more trouble by second guessing,” he said.
The Fed’s rate-setting committee will next meet Oct. 27-28.