Tags: federal reserve | lacker | rate hike | economic data

Fed's Lacker Favors June Liftoff Even as Recent Data Weak

Friday, 10 April 2015 09:13 AM

Federal Reserve Bank of Richmond President Jeffrey Lacker said he continues to favor a first interest rate increase in June because recent soft readings on the economy will probably prove temporary.

“Readings on some indicators have been unexpectedly weak in recent weeks, some of which may be attributable to unseasonably adverse weather,” Lacker, who votes on monetary policy this year, said in Sarasota, Florida, on Friday.

“It’s too soon say how much, however, and the more prudent approach is to look through very short-term fluctuations.”

The Federal Open Market Committee was split at its meeting last month on when to begin raising rates from near zero. Several participants wanted to normalize policy starting in June, while others favored later in the year, according to minutes of the March 17-18 gathering released on Wednesday.

“I expect that, unless incoming economic reports diverge substantially from projections, the case for raising rates will remain strong at the June meeting,” Lacker said to an event hosted by the Global Interdependence Center and the Financial Planning Association of the Suncoast. The comments were similar to a speech he gave on March 31.

In March, the FOMC dropped a pledge to be “patient” as it considered the first rate rise since 2006, while also reducing forecasts for the path of increases. Fed Chair Janet Yellen has since said borrowing costs would probably be raised gradually, and a weak payrolls report released last week has added to caution among officials.

Payrolls climbed by 126,000 in March, breaking a yearlong string of monthly gains exceeding 200,000, according to a Labor Department report on April 3.

Lacker said he was confident inflation would return to the Fed’s target over time. Prices as measured by the Fed’s preferred gauge rose just 0.3 percent in February from a year earlier, and inflation has languished below the central bank’s 2 percent goal for 34 straight months.

Lacker has led the Richmond Fed since 2004 and previously served as its research director. The Richmond Fed district includes Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.


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Federal Reserve Bank of Richmond President Jeffrey Lacker said he continues to favor a first interest rate increase in June because recent soft readings on the economy will probably prove temporary.
federal reserve, lacker, rate hike, economic data
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2015-13-10
Friday, 10 April 2015 09:13 AM
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