NEW YORK – The fed funds target rate will remain exceptionally low for an extended period of time, Federal Reserve Bank of Atlanta President and Chief Executive Officer Dennis P. Lockhart reiterated today.
A modest recovery, he said, and subdued inflation allow him to “fully support the message of the most recent FOMC statement to the effect that the fed funds target rate will remain exceptionally low for an extended period,” according to prepared text of remarks he delivered to the New York Association for Business Economics, according to prepared text released by the Fed.
Recovery, he said, will be deterred by a weak banking sector that is slow to extend credit, subdued consumer spending, and “extremely cautious business investment in inventory and capital goods.”
As for regulatory reform, Lockhart said, “reform should be grounded in realism about the character of the global financial and banking system going forward as well as the ability to legislate away some disagreeable aspects of that reality.”
There are no guarantees “that there will be no future crises” and nobody can “predict with any certainty future sources of trouble. Regulatory reform legislation can be thought of as an exercise in fortifying defenses against inevitable future stresses and problems.”
He pushed for the Fed to “play a central role in a defense structure designed to prevent or manage future crises.”
