Federal Reserve Bank of Richmond President Jeffrey Lacker reiterated Friday that he sees a strong case for the Fed to begin raising short-term interest rates this summer.
“I expect that, unless incoming economic reports diverge substantially from projections, the case for raising rates will remain strong at the June meeting,” Mr. Lacker said in remarks prepared for delivery in Sarasota, Fla.
Friday’s speech was largely identical to Mr. Lacker’s March 31 remarks in Richmond, Va.The Fed has held its benchmark federal funds rate near zero since December 2008 to stimulate spending and the broader economy. Most officials at the central bank expect to begin raising rates sometime this year, though the precise timing of the first rate increase remains uncertain.
Mr. Lacker, who is a voting member this year of the rate-setting Federal Open Market Committee, has been a longtime skeptic of the Fed’s easy money policies. He has repeatedly signaled that he favors raising rates at the June 16-17 policy meeting.
He said Friday that he is “confident” sluggish U.S. inflation will pick up toward the Fed’s 2% annual target over time and said the labor market now is “well within the confidence bands of any reasonable estimate of ‘maximum employment’,” which is one of the Fed’s mandated goals, along with stable prices.
“My own view is that, given what we know today, a strong case can be made that the federal funds rate should be higher than it is now,” he said. But the Fed already has said a rate increase is unlikely at the April 28-29 meeting, so June is “the first date at which the FOMC could raise the funds rate target without undermining its past communications,” he said.
Some officials, however, favor holding off on rate increases until later in the year, according to minutes released Wednesday from the Fed’s March 17-18 policy meeting.
After a recent stretch of weak economic data, “it’d be reasonable to think that the timing of the Fed’s first rate hike might be a little further off in time,” Federal Reserve Bank of New York President William Dudley said Wednesday. Mr. Dudley said a June rate increase “could still be in play,” but that “now the bar is a little higher.”
Mr. Lacker shrugged off the recent weak data, saying that “unseasonably adverse weather” may shoulder some of the blame. “It’s too soon say how much, however, and the more prudent approach is to look through very short-term fluctuations and assess emerging trends based on a longer run of data,” he said.
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