Taking a little longer to decide on liftoff may allow the economic picture to clear, but his backing a rate hike "will inevitably be a judgment call," Federal Reserve Bank of Atlanta President and Chief Executive Officer Dennis Lockhart said Thursday.
"My support for a liftoff decision will inevitably be a judgment call," Lockhart told Palm Beach County Business Leaders, according to prepared text released by the Fed. "I don't think it is advisable to approach such a decision with rigid quantitative triggers in mind. Strength in one aspect of the overall economic picture may offset ambiguity in another."
He noted, "waiting a while longer improves the chances of seeing confirmation from incoming data that the economy is on the desired path. I think it is highly desirable that the public sees an economic picture at the time of the liftoff decision that is consistent with the decision criteria the FOMC has set out. Ideally, coherence between data and decision would be clear to all."
Despite the "recent weakness," Lockhart said, "I do not believe the economy in some fundamental way is faltering, stalling, slowing." He suggested this year will follow 2014, when "a weak first quarter due to transitory causes followed by a pickup in growth in later quarters."
Hinting at patience, Lockhart said, "a few months" won't be enough "for direct, affirmative evidence to appear that would validate a decision to begin raising rates."
Lockhart said , "Ideally, I'd like to see direct, affirmative evidence in the data that the desired outcomes are in fact materializing. But I can get comfortable with less. I prefer at least some indirect evidence that progress toward our objectives is likely to continue. To get to 'reasonable confidence' about inflation, sufficient evidence could show up in growth numbers, employment numbers, and rising wages as an indication of tightening conditions."
