Economic conditions and the medium-term outlook support a rate hike, Federal Reserve Bank of Richmond President Jeffrey Lacker said Friday in explaining his dissent at Wednesday's Federal Open Market Committee meeting.
"I dissented because I believe that an increase in our interest rate target is needed, given current economic conditions and the medium-term outlook," Lacker said in a statement on the Richmond Fed's website.
Lacker said his view is "essentially unchanged" from September, when he also dissented on the FOMC vote, favoring a rate hike.
"My reasoning was based on my belief that with the steady growth in output and household spending that we have been observing — and expect to continue — the real (inflation adjusted) rate of interest should be higher than its current level of less than negative 1 percent," Lacker said.
Labor markets have "tightened considerably," he noted, adding "inflation will return to" the Fed's once "temporary effects of low energy and import prices have passed."
The global issues that were cited in September for the FOMC's decision to delay liftoff, Lacker said, "are not likely to change the medium-term outlook for U.S. growth and inflation. So I remain convinced that it is time to better align our interest rate policy with the economy's past progress and ongoing growth."
