Two Fed rate hikes 'conceivable' in 2016, September in play: Lockhart

Tue Aug 16, 2016 2:44pm EDT
 
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KNOXVILLE, Tenn. (Reuters) - The U.S. economy is likely strong enough for at least one interest rate increase before the end of 2016, with two hikes a possibility, Atlanta Federal Reserve Bank President Dennis Lockhart said on Tuesday.

"I would not rule out September," Lockhart said, citing what he described as ongoing U.S. job gains and "healthy" signs that inflation will pick up as possibly justifying a rate increase at the Fed's policy meeting next month.

"If the meeting were today I think the economic data would justify a serious discussion," he told reporters after a speech to the Rotary Club of Knoxville. "It's conceivable we could have two rate increases this year."

Earlier on Tuesday, New York Fed President William Dudley also voiced confidence in the economy and said the U.S. central bank might raise rates as soon as its Sept. 20-21 policy meeting after months in which outside risks prompted it to hold back.

In his speech in Knoxville, Lockhart said recent U.S. gross domestic product data overstated weakness in an economy whose fundamentals remain on track for moderate growth through this year and next. He added, however, that he is not locked into a particular date for a rate increase.

The Fed, which raised rates in December for the first time in nearly a decade, is also scheduled to hold policy meetings in early November and December.

BUSINESS INVESTMENT LAG

Lockhart, who is currently not a voting member of the Fed's policymaking committee, also pointed to a risk he and other Fed officials have given increased attention - the lag in business investment.   Continued...

 
Dennis Lockhart of the Atlanta Fed takes part in a panel convened to speak about the health of the U.S. economy in New York November 18, 2015. REUTERS/Lucas Jackson/File Photo - RTSETUH