Fed officials say rate hike plan intact despite weak U.S. data
By Ben Klayman
DETROIT (Reuters) - The Federal Reserve should remain on track to raise interest rates later this year despite the U.S. economy's weak start to the year and a stock market sell-off this week, two Fed officials said on Thursday.
In separate events in Frankfurt and Detroit, St. Louis Fed President James Bullard and Atlanta Fed President Dennis Lockhart said U.S. monetary policy might need to be adjusted in light of the economy's steady improvement since the 2007-2009 financial crisis.
"Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years," Bullard said at a conference in the German financial hub.
The comments came amid a spate of weak U.S. economic data that prompted major analyst firms to scale down their growth this week. Fed policymakers also lowered their growth forecasts at last week's policy-setting meeting.
Investors have followed suit, sending shares on Wall Street down for four consecutive trading sessions.
The challenge now, Lockhart said, is to sort out whether recent weakness in exports, manufacturing and capital investment indicate the start of an economic slowdown or other temporary factors such as the soaring value of the U.S. dollar.
Lockhart said he is confident for now that the weakness is "transitory," and still regards it as highly likely that the Fed will raise rates at either its June, July or September meetings.
"We're still on a solid track ... The economy is throwing off some mixed signals at the moment and I think that is going to be passing or transitory," Lockhart said in an interview with CNBC from a Detroit investment conference. Continued...