The Federal Reserve must exercise patience while the Brexit fallout settles, Federal Reserve Bank of Atlanta President and Chief Executive Officer Dennis Lockhart said Thursday.
"Brexit amounts to a storm that has clouded the economic waters," Lockhart told the Rocky Mountain Economic Summit, according to prepared text released by the Fed. "For the very near term, I see little choice but to exercise some patience and let the picture clarify."
As a result of the then upcoming Brexit vote and a weak May employment report, Lockhart said, he was "comfortable" with the decision to hold rates steady at the last Federal Open Market Committee meeting.
In fact, Lockhart, while noting policy is data-dependent, urged a near-term "cautious and patient approach" to monetary policy.
Additionally, he noted, the Brexit situation is not over. "It's too early to sound the 'all clear' as regards financial market stability. Fed and other policymakers will need to stay on alert for signs of instability severe enough to pose a threat to the broad economy," Lockhart said. "So far, the financial market turbulence we've seen does not seem to have caused direct harm to the country's economy. As many have stated, it is not a 'Lehman moment.'"
Brexit fallout could last "a number of years, and the associated uncertainty could become an economic headwind," he said.
