NEW YORK – With the public sentiment expecting inflation to rise, the Fed mus not wait “too long” to raise the Fed funds rate target, Federal Reserve Bank of Richmond President Jeffrey M. Lacker said today.
While inflation has been between 1% and 2% since early 2009, “I believe inflation is unlikely to stay that low,” Lacker told a Piedmont-Triad Economic Development Summit, according to prepared text of his remarks, which were released by the Fed. “In fact, the public apparently expects higher inflation in the future, which suggests that policymakers will need to be careful to avoid waiting too long to raise rates.”
The U.S. economy is “recovering from a very severe recession,” with indicators suggesting economic growth since the middle of last year. “While the beginning of a recovery does mark the return of growth in overall economic activity, there are always economic sectors where weakness persists for some time,” he said. He mentioned the housing market and the labor markets as lagging in the recovery, but both have provided glimmers of positive news recently.
