Investing.com - A stronger dollar remains a headwind to the U.S. economy, Federal Reserve Vice Chair Stanley Fischer said Thursday, noting accommodative monetary policy helped the economy withstand the impact.
"While the dollar's appreciation and foreign weakness have been a sizable shock, the U.S. economy appears to be weathering them reasonably well, notwithstanding their large effects on certain sectors of the economy heavily exposed to international trade," Fischer said in remarks prepared for a conference hosted by the Federal Reserve Board.
"Monetary policy has played a key role in achieving these outcomes through deferring liftoff relative to what was expected a little over a year ago," he added.
The comments come as the stage seems set for a hike in interest rates at the end of the year by the Federal Reserve, though caution remains. Earlier, Federal Reserve Chair Janet Yellen avoided the topic in a separate speech.
Fischer's remarks come as federal Reserve officials lined up behind a likely December interest rate hike with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero.
"I see the risks right now of moving too quickly versus moving too slowly as nearly balanced," New York Fed President William Dudley said in remarks delivered at the Economic Club of New York on Thursday.
Dudley, who has a permanent vote on the Fed's policy-setting committee, said the decision still required policymakers to "think carefully" because of the risk that the United States is facing chronically slower growth and low inflation that would justify continued low rates.