Tapering should result in the end of quantitative easing in the last quarter of 2014, and Federal Reserve Bank of Atlanta President and Chief Executive Officer Dennis Lockhart said Tuesday he is "comfortable" with the first rate hike, or liftoff in the last half of 2015.
"I believe the wind-down of asset purchases continues to be appropriate," Lockhart said in a speech at Louisiana State University, according to prepared text released by the Fed. "I expect tapering to continue at the pace we've seen since December with the result that the quantitative easing, or QE, program will come to a conclusion in the fourth quarter."
"I, as one policymaker, am not in a rush to get to liftoff," Lockhart said. Once QE ends, he said, "I continue to be comfortable with a projection of the second half of next year (2015) as likely timing" for liftoff.
"Monetary accommodation will be warranted for some time," he said, despite the improvement in the economy. After asset purchases wind down, "anticipation of the next policy move will likely intensify," Lockhart noted. But with labor slack still expected and inflation remaining below 2%, he added, "would, in my view, justify patience in raising policy rates."
Lockhart noted there is no "absolute certainty" in predicting the economic future and he would like confirmation of the "data validating the view that above-trend growth is occurring and is sustainable, and that the FOMC is closing in on its policy objectives. One quarter's data isn't enough. I expect it will take a number of months for me to arrive at conviction on that account."
After the first rate hike, Lockhart said, he expects "a cycle of gradually rising rates. This will be a significant, even historic, transition that must be executed skillfully, with tools sufficient to the task, and with clear communication that fosters orderly market adjustment, to the extent possible."
