The U.S. central bank should stick with its earlier plan to raise interest rates four times this year, said Richmond Fed President Jeffrey Lacker on Tuesday. “There is a point at which I will be advocating to take the next step, but it is not now”.
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“I definitely see two or three rate hikes…as being reasonable” this year, based on projections provided by Fed officials in March and the fact that economic data has not delivered any surprises since then, San Francisco Fed President John Williams told reporters after a speech here.
The survey, known as the Beige Book, will be discussed at the Fed’s next meeting on April 26-27.
Policymakers at the USA central bank cut their forecasts in March for how many interest rate hikes are likely to be needed this year, but Lacker said this was unnecessary.
“There is no question first-quarter GDP numbers are weak”, said Mr Kaplan, referring to gross domestic product, “and probably inconsistent with the job numbers” which show “solid” employment gains.
But now that the Fed is actively looking at when to raise rates again after lifting them in December for the first time in almost a decade, the problem is more acute.
“It’s not completely clear that those are going to be sustainable increases…”
“My sense is that the less leisurely but still gradual pace of target rate increases that FOMC participants submitted at year-end is still more likely to be appropriate”, Lacker said.
“In a way it doesn’t matter so much whether we were to raise rates in April, or June, or…July”, he added.
While it is unclear whether the data is strong enough for the Fed to follow through on its forecast for two rate hikes this year, or whether traders betting on just one or even none have it right, most agree there will be no rate hike in April. “Is there a risk that inflation could ramp up, or tick up beyond 2 percent?”
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“Being patient and cautious doesn’t mean standing still”, the Dallas Fed leader said.
