Investing.com -- Speaking to the Economic Club of New York on Monday afternoon, Federal Reserve vice chairman Stanley Fischer indicated that the Fed will begin raising interest rates when the benefits of lift-off outweigh the costs.
Striking an optimistic tone, Fischer added that the approach of lift-off reflects the significant progress the U.S. central bank has made with its dual mandate since it began lowering rates in 2009 following the Financial Crisis. The comments were the first by a voting member of the Federal Open Market Committee (FOMC) since the Fed removed a reference to remaining patient on the timing of a potential interest rate hike last week. The reference typically signals that the Fed will not institute a rate hike for either of its next two FOMC meetings.
Fischer reiterated on Monday that the Fed will likely raise interest rates at some point this year.
In addition, Fischer indicated that the Fed needs to see further improvements in the labor market and needs to be "reasonably confident" that inflation is moving back to its target goal of 2% before it begins to raise its benchmark Federal Funds Rate.
Fischer added that a "smooth plan upward will certainly not be realized," as the Fed has no plans for regular rate hikes. The stance differs from one the Fed employed on two occasions in 2004 and 2007 when it employed a model for steady rate hikes on a long-term basis.