Fed’s Lockhart Confident Q1’s Weakness Transitory

Atlanta Federal Reserve bank president Dennis Lockhart said on Wednesday that the United States remains on track for a likely interest rate hike in the June to September period, with a weak first quarter likely to give way to stronger growth.

“The weakness of the first quarter got my attention. I still believe the factors are transitory,” Lockhart told reporters at a monetary policy conference here. “We will see a pick-up.”

Fed policymakers and many analysts cut their U.S. growth projections after a first-quarter slowdown that stemmed in part from the hit U.S. energy companies are taking from low oil prices, and the hit exporters are taking from a strong dollar.

Fed officials say they remain convinced that the economy has enough underlying strength for the recovery to continue, and that cheap oil will ultimately be a boon to the economy, felt through increased consumer spending and higher company profits.

Lockhart said he will be paying particular attention to employment indicators in coming weeks.

Though the unemployment rate has been dropping, and at 5.5 percent is near some traditional estimates of full employment, many Fed officials feel slack remains in the labor market in the form of high numbers of part-time workers, and those on the sidelines who may want jobs.

“There still remains a not insubstantial amount of slack,” in the labor market, Lockhart said

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