Fed Member Lockhart Says Economy Has Compelling Case for Rate Hike

U.S. economic data would have to “drastically” alter the nation’s outlook over the next two weeks to change the “compelling” case for an initial hike in interest rates when the Federal Reserve next meets on Dec. 15-16, Atlanta Fed President Dennis Lockhart said on Wednesday.

“My staff and I are getting close to a last review of the overall picture suggested by the data,” Lockhart said of the potentially “historic” Fed session later this month that may approve the first interest rate increase in nearly a decade.

The decision would mark a final end of sorts to the economic crisis and recession that rocked the U.S. economy beginning in 2007, and led the Fed to slash rates to near zero seven years ago.

Given unemployment at five percent, ongoing economic growth, and an expectation that inflation will rise to the Fed’s two percent target, Lockhart said it would take a major negative turn of events to change his opinion that the Fed’s extended stay at the zero lower bound should come to an end.

“Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” Lockhart told a community group in Fort Lauderdale.

via Reuters

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 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