Atlanta Fed’s Lockhart Optimistic of Imminent U.S. Interest Rate Hike

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Atlanta Fed’s Lockhart Optimistic of Imminent U.S. Interest Rate HikeAtlanta Fed President Dennis Lockhart expressed confidence that the Federal Reserve may raise interest rates as soon as mid-2015, influenced by strong U.S. economic growth.

Addressing the Rotary Club of Atlanta, Lockhart told reporters that the “economy is hitting on all cylinders.” He also said he expects the strong economic growth will continue past 2015, inflation to rise and unemployment to decline-conditions that should influence the central bank to hike interest rates by midyear.

Lockhart also said that despite the low inflation-which remains under the central bank’s 2 percent target-it is almost time to increase rates, on condition that inflation doesn’t fall further steadily. He also noted the weak wage growth also applied.

“The Fed’s decision will either be informed by some positive indicators or the absence of negative indicators,” Lockhart said, according to Reuters. “It will be the absence of losing ground, as might be suggested by a run of core inflation numbers that are declining.”

The remarks by Lockhart, widely considered a Fed centrist, may give a pointer as to how the central bank may roll out its first interest rate hike since the 2008 financial recession. The first increase is expected to have minimal effect on interest rates, with rates forecasted to increase slowly to a level considered as neutral. This could mean further years of economic stimulus ahead.

Lockhart listed major external risks to U.S. economic growth such as sluggish global growth, falling crude prices and various other factors. However, he said the low fuel prices may eventually benefit the local economy. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com