The Federal Open Market Committee will be able to raise rates again this year as the economy continues to recover, but Federal Reserve Bank of Atlanta President Dennis Lockhart said he'll be keeping a close eye on inflation.
"I expect further rate increases will be justified by economic performance in 2016," Lockhart told the Rotary Club of Atlanta, according to text released by the Fed.
But he noted rate hikes will be based on data, and are not "predetermined" and there is no schedule or "preset path of policy" or map. "Monetary policy is not on autopilot."
The consensus, he noted, is increases will be gradual, not every meeting. "I'd like to be more definitive in predicting future rates, but the degree of uncertainty — particularly as regards global influences on our economy — affirms the wisdom, in my opinion, of letting the economic data do the talking. This means there is necessarily some tension between clarity of direction and policy optionality. It's not possible to max out both. I think the Committee has struck a reasonable balance under the current circumstances."
And while he will look at "a broad spectrum of data," it's inflation that "will be a key focus." Lockhart said, "I'm forecasting inflation readings to start to converge to our 2 percent target in 2016."
He termed economic growth as "moderate," not "spectacular … but respectable, just a little shy of the longer-term trend rate of growth per my team's estimation."
While market turmoil shouldn't be a problem, Lockhart said, if it persists he could revise his outlook.
