The Economy

Fed Official Sees Rate Hike This Year as ‘Appropriate’

The Atlanta Fed's president believes the economy is still on a "satisfactory track" and a "liftoff decision" on rates could come in October or Dece...
Katie Kuehner-HebertOctober 9, 2015

Recent economic data “give rise to some ambiguity,” but it may still be “appropriate” for the U.S. Federal Reserve to raise interest rates by the end of this year, a top Fed official said in a  speech Friday.

Atlanta Fed President Dennis Lockhart compared the speculation about the timing of a rate hike to “a bit of a roller-coaster ride,” noting that the weak September jobs report “was interpreted by some as lowering the odds of liftoff in October or December.”

“I believe the economy remains on a satisfactory track, and, speaking for myself, I see a liftoff decision later this year at the October or December [Federal Open Market Committee] meetings as likely appropriate,” Lockhart told the Society of American Business Editors and Writers conference.

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But he added that the “data are giving off varied signals, and there is more ambiguity in the current moment than a few weeks ago. In my opinion, the situation calls for especially diligent monitoring of incoming data with particular attention to consumer activity.”

Last month, the Fed held off raising rates in the face of the slowdown in China, global market volatility and falling commodity prices.

“Since then, disappointing September jobs growth has caused investors to sharply discount an October rate hike, and to give a December move about a 40% probability, based on futures markets,” Reuters reports.

Lockhart said “recent information on the economy gives rise to some ambiguity” but he still believes the inflation data “will show in due course the desired upward trend” toward the Fed’s 2% target.

“I perceive a touch more downside risk today than I saw some weeks ago,” he conceded, but “we have come a long way in the almost seven years since the federal funds rate reached the zero bound and the six-and-a-half years since the economy hit bottom.”

“I continue to feel that cumulative progress is consistent with liftoff relatively soon,” Lockhart concluded.