Lockhart said that trying to interpret the recent twists and turns in the economy has been like riding a roller-coaster.
Advertisement
Other markets:Asian shares rallied (http://www.marketwatch.com/story/asian-markets-rise-after-fed-minutes-cast-doubt-on-rate-hike-2015-10-09) in the wake of the Fed minutes and hopes for lower us rates for longer.
Minutes from the Fed’s September policy meeting, released Thursday afternoon, showed the central bank remains concerned about low US inflation.
“Over the intermeeting period, the concerns about global economic growth and turbulence in financial markets led to greater uncertainty among market participants about the likely timing of the start of the normalization of the stance of USA monetary policy”, it added.
“As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment”.
The dollar tumbled to a three-week low against the euro on Friday as investors continued to bet against a USA interest-rate increase in the coming months.
Lockhart, who has never dissented, said consumer activity will be a key signal that the USA economy can sustain its momentum despite the global slowdown.
“I can understand why people might get a little skeptical” of the Fed’s rate-rise guidance, he said.
But he warned: “There’s a few turnaround in sentiment but investors’ confidence will fade easily if the economy doesn’t recover as expected and increases the market’s volatility”.
Wholesale inventories of durable goods rose 0.3% month-on-month in August, as a 0.3% decline in automotive inventories was offset by an increase in computer and machinery, with the former rising 1.9%, while the latter climbed 0.5%. “I see a (rate) liftoff decision later this year at the October or December FOMC meetings as likely appropriate”, Lockhart said. He pointed out while he’s watching the conversation about the possibility of using negative short-term rates to boost growth, “the notion we would have to use that tool in the near term is not very plausible”. Markets are now not pricing in a quarter-point rate hike until all the way out to 2017; and the Bank of England is expecting inflation to remain below one percent until spring of 2016, so there really isn’t any hurry to hike.
Fischer is considered on the “hawkish” or aggressive side of the Fed’s committee that votes on interest rates, meaning he’s generally more in favor of raising rates. Since then, the Fed has kept its target rate unchanged and pumped trillions of dollars into the economy in hopes of spurring a faster recovery. The Fed targets inflation of about 2 per cent.
Advertisement
Although a stronger dollar is weighing on exports and lower prices for oil and other commodities may be holding back inflation, officials judged those factors to be temporary.
