Fed torn on when to raise interest rates

WASHINGTON, Oct. 9 (UPI) -- The U.S. Federal Reserve's policy council is showing signs of increased disharmony regarding the timing of unwinding emergency financial programs.

In recent memos, the Fed's decision making group, the Open Market Committee, has said it would keep interest rates low "for an extended period."

Fed Chairman Ben Bernanke has said, "when the economic outlook improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration," The New York Times reported Friday.

But Richard Fisher, president of the Federal Reserve Bank of Dallas said Sept. 29, "that wind-down process needs to begin as soon as there are convincing signs that economic growth is gaining traction."

Similarly, Thomas Hoenig, president of the Kansas City Fed, said recently, "sooner rather than later," was the course he would choose.

"Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy," he said.

This week, the Reserve Bank of Australia became the first central bank among Group of 20 countries to raise rates. The Bank of Korea said Friday it was considering raising rates, but kept its key lending rate at 2 percent as of Friday.