Central Banks

Tuesday, August 16, 2016 - 14:17

Atlanta Fed's Lockhart: Would Not Rule Out Rate Hike in Sept


--Would Have to Have Serious Discussion About Hike If Meeting Today
--'Still Conceivable' To Have Two Rate Hikes in 2016
--Could Imagine Two Rate Hikes Next Year, Possibly More

KNOXVILLE, Tenn. (MNI) - Atlanta Federal Reserve Bank President Dennis Lockhart said Tuesday he would not rule out a rate hike at the September meeting of the policymaking Federal Open Market Committee.

"I would not rule out September" as a time for a hike in the fed funds rate, Lockhart told reporters following a speech to the Rotary Club of Knoxville. "If the meeting were today, I think the economic data stream would justify a serious discussion of a rate increase."

Lockhart, who votes again on the FOMC in 2018, said the Fed will get more data to consider over the next few weeks before the Sept. 20-21 meeting. "We'll see what that tells us, but I would not rule out September, at least for a serious discussion," he said.

In prepared remarks, Lockhart said he is "not locked in to any policy position at this stage," but added, "If my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year."

Asked by reporters if he would be considering two rate hikes in 2016, Lockhart pointed out that with three FOMC meetings left this year it was a possibility. "I think it is still conceivable that we have two rate increases this year," he said.

As for next year, the FOMC in its latest Summary of Economic Projections was expecting a median of three rate hikes. This projection will be updated at their September meeting.

Asked for his view of how many hikes might be appropriate next year, Lockhart said, "The answer to 2017 is just going to depend on how the economy evolves and if my outlook materializes, then I could imagine certainly two rate increase next year, possibly more."

One data point the FOMC will get before it meets again in September is the August jobs report, which comes on the heels of two strong months of employment data. But Lockhart said he's comfortable with rate hikes even with slower monthly job gains.

"Thinking in terms of policy, I'm not expecting 250,000-plus or even in excess of 200,000-plus" monthly job gains, he said. "I would like to see continuing job gains, with a nice measure of cushion (above) breakeven numbers, which I would put at between 80,000 and 100,000."

So what is he looking for in terms of job gains? "I would find monthly gains of 150,000 to be very encouraging," he said, "and I think a reasonable basis for thinking about policy."

--MNI Washington Bureau;tel: +1 202 371-2121; email: karen.mracek@mni-news.com

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