Given recent data, “it is hard for me to conclude that we have made progress on that objective,” Lockhart said. “In its fundamentals, inflation is reflecting what are still, in my view, lukewarm demand conditions… At this point I’m concerned more about a persistent undershoot,” than inflation which gets out of hand, as some at the Fed have warned.
He also stated what has become a sort of guiding principle at the Fed under chair Janet Yellen – that it would be worse to raise interest rates prematurely, and potentially damage the recovery, than to wait too long and risk faster-than-desired inflation.
“It would be worse to reverse course because of having made a premature decision than to be patient and run the risk that you are a little late,” said Lockhart. “When we begin to change policy we want to have confidence in an outlook.”
As a result, even as many analysts have pushed forward their expectations of a Fed rate hike to earlier in 2015, Lockhart said he expected “conditions for liftoff to ripen by the middle of 2015 or later.”