Fed policymakers see strong U.S. growth, disagree if too hot

By Ann Saphir

PALM BEACH, Fla. (Reuters) – The U.S. economy should grow at a good clip this year, two Fed officials said on Wednesday, as tax cuts boost spending by both consumers and businesses, but they disagreed on how close the economy is to overheating and the need for rate hikes this year.

“2018 is going to be a good year,” Dallas Federal Reserve Bank President Robert Kaplan said at an American Council of Life Insurers executive roundtable, adding that the Fed needs to move deliberately and gradually this year on removing monetary policy accommodation, raising rates three times.

The U.S. economy is doing “extremely well,” Chicago Federal Reserve Bank President Charles Evans told the same group, forecasting growth of a bit higher than 2.5 percent this year, and a bit lower next year. But he said he is worried about low inflation, and does not see much signs of overheating in the labor market.

Neither are voting members of the Fed’s monetary policy committee this year, but both take part in the Fed’s regular policy-setting meetings, the next of which is scheduled in two weeks.

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