Richmond Fed President says Fed Rate Hike could come before 2014

The Federal Reserve may need to raise official interest rates before late 2014, Richmond Fed President Jeffrey Lacker said on Friday, justifying his dissent against the central bank’s latest decision.

The Fed left its monetary policy on hold this week, but sent a strong signal that it was considering another round of bond purchases if recent economic weakness persists.

Policymakers also reiterated their view that the Fed’s benchmark overnight interest rate, currently near zero, would stay at those rock bottom lows until at least late 2014.

But Lacker, who has dissented at every meeting this year, stepped up his opposition to the date-specific forward guidance approach.

“I believe that exceptionally low federal funds rates are not likely to be warranted for this length of time,” said Lacker, a prominent inflation hawk, in a statement.

“My assessment is that significant uncertainty regarding the evolution of economic conditions over the next few years makes the future path of interest rates difficult to forecast.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza