13 Jan 2015
First action to raise interest rates to be justified by the middle of the year - Fed's Lockhart
FXStreet (Mumbai) - Atlanta Fed Chief Dennis Lockhart told the Atlanta Rotary Club on Monday that while market participants eagerly watch out for the timing of the rate-hike, from the Federal Reserve’s perspective, the exact timing of lift-off was not the most important concern.
He further added that predicting inflation readings and forecasts may be difficult in the face of plummeting oil prices and the rallying dollar, as well as softening of some measures of inflation expectations.
Key Quotes:
Atlanta Fed Chief Dennis Lockhart said his colleagues should not get "too rigid about lift-off a little earlier or later."
"A couple of years hence, whether the first rate increase came at a particular meeting or another - whether a bit earlier or later than expected - isn't going to make a great deal of difference for the real, Main Street economy,"
He added that the US economy "is hitting on all cylinders" and "solid momentum." "If that is indeed the case, I believe the first action to raise interest rates will in all likelihood be justified by the middle of the year,"
Lockhart was almost certain that falling energy costs will produce some "weak inflation readings early in the year", but once that influence has passed, the Fed should see inflation move toward its target.
"If the early months of this year bring mixed news on the economy, the risk manager in me will lean to preferring a later date for the first policy move to an earlier one,"
"We're observing a rather sharp contrast between US economic prospects and those of much of the rest of the world."
"I expect a decline in energy-sector new investment and some falloff in employment to be more than offset by a boost to consumer activity. Also, the lower cost of oil imports should positively affect the net exports component of the GDP growth calculation."
He further added that predicting inflation readings and forecasts may be difficult in the face of plummeting oil prices and the rallying dollar, as well as softening of some measures of inflation expectations.
Key Quotes:
Atlanta Fed Chief Dennis Lockhart said his colleagues should not get "too rigid about lift-off a little earlier or later."
"A couple of years hence, whether the first rate increase came at a particular meeting or another - whether a bit earlier or later than expected - isn't going to make a great deal of difference for the real, Main Street economy,"
He added that the US economy "is hitting on all cylinders" and "solid momentum." "If that is indeed the case, I believe the first action to raise interest rates will in all likelihood be justified by the middle of the year,"
Lockhart was almost certain that falling energy costs will produce some "weak inflation readings early in the year", but once that influence has passed, the Fed should see inflation move toward its target.
"If the early months of this year bring mixed news on the economy, the risk manager in me will lean to preferring a later date for the first policy move to an earlier one,"
"We're observing a rather sharp contrast between US economic prospects and those of much of the rest of the world."
"I expect a decline in energy-sector new investment and some falloff in employment to be more than offset by a boost to consumer activity. Also, the lower cost of oil imports should positively affect the net exports component of the GDP growth calculation."