Economic
conditions in the United States have largely returned to normal and a
Federal Reserve decision to raise interest rates should come soon,
Atlanta Fed President Dennis Lockhart said on Monday.
"I
think the point of 'liftoff' is close," Lockhart said in a speech to
the Atlanta Press Club. "The economy has made great gains and is
approaching an acceptable normal ... conditions are no longer
extraordinary."
He later told journalists he was "very disposed" to a rate increase at the Fed's September policy meeting, but emphasized that the path of subsequent hikes should be gradual. He defined a gradual path as being more frequent than every other meeting.
His comments, coming on top of similar remarks by other Fed policymakers, signal the U.S. central bank's growing recognition that its full employment target may be close at hand, while progress on lifting inflation to a steady 2 percent rate remains elusive.
Labor market strength appears to have set the stage for a rate hike next month, but it remains something of an act of faith that inflation will eventually recover as well.
In
an interview with Bloomberg TV on Monday, Fed Vice Chairman Stanley
Fischer said the U.S. economy had "nearly full employment but very low
inflation." Fischer added that rates would not stay this low "forever."
Lockhart is regarded as a centrist and possible swing vote on the Fed policy committee, and his steadily firming language about the U.S. economy has served as a barometer of the central bank's willingness to take that leap.
Lockhart said on Monday the U.S. economy had cleared several major hurdles that worried him earlier in the year and was now strong enough to handle the end of more than six years of near-zero rates.
Risks from abroad, whether a Greek exit from the euro zone or a meltdown in China, have receded, he said, while job growth has left the U.S. economy "just a shade" from full employment and put the Fed in reach of one of its key goals.
While oil prices have made it difficult to gauge inflation, Lockhart said he is confident it will rise toward the central bank's target in the coming months as the economy continues to strengthen.
"Compared to earlier in the year, we know a lot more and can shelve some concerns," Lockhart said. "We are getting closer and closer to what feels like a healed state."
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| The United States Federal Reserve Board building is shown in Washington October 28, 2014. |
He later told journalists he was "very disposed" to a rate increase at the Fed's September policy meeting, but emphasized that the path of subsequent hikes should be gradual. He defined a gradual path as being more frequent than every other meeting.
His comments, coming on top of similar remarks by other Fed policymakers, signal the U.S. central bank's growing recognition that its full employment target may be close at hand, while progress on lifting inflation to a steady 2 percent rate remains elusive.
Labor market strength appears to have set the stage for a rate hike next month, but it remains something of an act of faith that inflation will eventually recover as well.
Lockhart is regarded as a centrist and possible swing vote on the Fed policy committee, and his steadily firming language about the U.S. economy has served as a barometer of the central bank's willingness to take that leap.
Lockhart said on Monday the U.S. economy had cleared several major hurdles that worried him earlier in the year and was now strong enough to handle the end of more than six years of near-zero rates.
Risks from abroad, whether a Greek exit from the euro zone or a meltdown in China, have receded, he said, while job growth has left the U.S. economy "just a shade" from full employment and put the Fed in reach of one of its key goals.
While oil prices have made it difficult to gauge inflation, Lockhart said he is confident it will rise toward the central bank's target in the coming months as the economy continues to strengthen.
"Compared to earlier in the year, we know a lot more and can shelve some concerns," Lockhart said. "We are getting closer and closer to what feels like a healed state."
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