Although he sees liftoff as "a close call," Federal Reserve Bank of Atlanta President and CEO Dennis Lockhart said Thursday risks that led to the Federal Open Market Committee holding rates at its last two meetings are dissipating and "the case for liftoff will continue to firm up."
"Liftoff remains a close call," Lockhart said in a speech prepared for delivery at the Joint Central Bank Conference in Bern, Switzerland, according to prepared text released by the Fed. "A relatively small adjustment in an estimate of the neutral rate, or revisions in my forecast of how quickly remaining output and inflation-target gaps might close, could quite easily point to a longer period for a zero funds rate."
"I expect to see a subsiding of the risks that appropriately led, in my opinion, to a policy hold in September and October," he said. "I think the case for liftoff will continue to firm up."
He sees adjustment after liftoff as "very gradual."
The economy, he said, is "in the midst of transition from an extraordinary period that called for unconventional tools, to a period where we again utilize rule-like benchmarks."
