WASHINGTON — Federal Reserve Bank of Richmond president Jeffrey Lacker warned Friday of the risk of overestimating the extent to which economic slack and high unemployment will contain inflation pressures, and said policymakers must be ready to withdraw stimulus even before reaching full employment.
Lacker repeated his view that accommodation will have to be withdrawn by mid-2013 rather than late 2014.
In an interview with the cable network CNBC, Lacker, who is a voter on the Federal Open Market Committee, said he is optimistic about the state of the economy and the current outlook for inflation.
“I’m reasonably hopeful we’re going to get good growth this year and rising next year,” Lacker said, repeating his forecast for 2-3% growth in 2012. “It could get to 3% next year.”
Meanwhile, inflation currently is not a problem. “We’re in reasonably good shape right now,” he said. “I’m expecting inflation to be around 2% in the next year or two.”