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The head of the Richmond Federal Reserve said on Tuesday that the central bank should lift its benchmark lending rate more rapidly than Wall Street currently anticipates.

Jeffrey Lacker said in a speech in Delaware that given the increase in inflation and continued tightening in the labour market over the past year, the Fed should add to its December 2016 rate rise “sooner rather than later in order to reduce the risks associated with having to raise rates more rapidly later on”.

The central banker added that while there remains “tremendous uncertainty” over the path of fiscal policy given US President Donald Trump’s promise to unleash a large spending programme and cut taxes, “greater fiscal stimulus implies higher interest rates than would otherwise be warranted”.

Mr Lacker is a non-voting member of the Fed’s policy-setting board that has generally leaned in a hawkish direction, and has said previously that he plans to retire this October.

Futures markets suggest investors are expecting one to three rate increases this year. The Fed projected in December that it would increase the federal funds rate three times.

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