NEW YORK – The economy “requires continued support of accommodative monetary policy” as it recovers and tightening too soon is risky, Federal Reserve Bank of Atlanta President and Chief Executive Officer Dennis P. Lockhart said today.
“I believe the recovery requires continued support of accommodative monetary policy,” he told an audience in Florida today, according to prepared text of his remarks, which were released by the Fed. “I think there is risk associated with starting a process of tightening too soon. In my view, the strong medicine of low rates should remain in place to facilitate adjustment processes that are by their nature gradual.”
Lockhart said the economy “is well into recovery,” and has bee so for nearly a year, according to economic indicators. “Positive trends are evident in a number of data points that are the vital signs of the economy. I should add that anecdotal feedback from contacts across the Southeast and elsewhere conveys improving confidence.”
But, “lackluster” growth “leaves the economy somewhat vulnerable to shocks or setbacks that might derail the recovery. At the same time, the recovery thus far has been a testament to the economy's capacity to move forward despite serious damage done by the recession and the repair required in its aftermath.”
Housing is stabilizing, but won’t “return to precrisis levels of construction activity, prices, or homeownership for some time,” Lockhart said.
Lockhart also said he does “not expect inflation to change the course of economic recovery over my forecast horizon.”
