Fed's Lockhart: Data Not Coming in to Support Strong 2H Outlook

WASHINGTON — Atlanta Federal Reserve Bank President Dennis Lockhart, interviewed at Jackson Hole by CNBC, Friday said he personally could support a September beginning to tapering if the data holds up but, he said, there's not a lot of data between now and then and what's coming in so far does not support his outlook for a strong second-half performance.

"I'm confident in a continuation of this sort of moderate growth path," said Lockhart, who is not an FOMC voter this year or next. "The strong pickup in the second half and into 2014 is in my outlook, it's in my official forecast, but we're going to have to watch it very carefully."

"The data is not coming in in a way that confirms that strong pickup in the second half," he said.

The second half, he said, should see the 2% to 2.5% growth rate that he sees for the full year, "but I think getting to 3% in the second half, I just can't see that at the moment. At least the early indications are not helping me come to that conclusion."

Lockhart said revisions to GDP might make the first half look a little better.

On a beginning to tapering, "I can't speak for the Committee," he said. "I would be supportive in September as long as the data that come in between now and then basically confirm the path that we're on."

The most worrying risk, he said, is that Congress mishandles its decisions on the FY2014 budget and the debt limit. "It could be a confidence blow of some kind if we have a really difficult political situation develop on the Hill," he said.

House Speaker John Boehner Thursday told reporters he foresees the House passing a short-term continuing resolution to keep government operating as soon as members return after the first week of September. He made no reference to the debt limit deadline soon afterward.

Lockhart said he thinks the press coverage of the Larry Summers-Janet Yellen candidacies to succeed Ben Bernanke has been "unprecedented" but is having not effect on the FOMC.

Later, on Bloomberg TV, Lockhart said it seems the economy has so far absorbed somewhat higher interest rates without difficulty.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER