Reducing the Fed’s balance sheet needs to be done neither too fast nor too slowly, Federal Reserve Bank of Atlanta president Dennis P. Lockhart said yesterday, adding that he backs interest rates remaining low for an “extended period.”
“A bit like Goldilocks’ porridge, the exit or unwinding process needs to be — in my view — not too fast, not too slow, but just right,” Lockhart told the Rotary Club of Atlanta, according to prepared text of the speech released by the Fed.
“I continue to support an interest rate policy described in recent [Federal Open Market Committee] statements as low for an 'extended period,’ ” he said. “What does 'extended period’ mean? I don’t want to put a date on it.
“To me, it means the policy rate will be kept low until recovery has shown momentum that is based on private business and consumer demand, job growth is established or at least imminent, and the downside risks appear to be safely navigable. This unwinding is in the context of well-behaved inflation, of course.”
