The Federal Open Market Committee will raise interest rates in the last half of next year, Federal Reserve Bank of Atlanta President and CEO Dennis Lockhart said Wednesday.
"The main instrument of monetary policy is forward guidance about the path of interest-rate policy and the conditions that will justify liftoff," Lockhart told the Greater Miami Chamber of Commerce according to prepared text of his speech, released by the Fed. "If our assumptions are invalidated by incoming data, I think we will have to alter guidance. But based on my working medium-term outlook, I see the latter half of 2015 as the likely time frame for the first move to higher rates."
Lockhart backs the continued tapering of quantitative easing, which he sees ending in October or December. "With our asset purchases tapering on a pretty predictable course, it is understandable that the focus has jumped ahead to the question of when the FOMC begins the process of 'liftoff' of the federal funds target from the zero floor," he said. "Anticipation is a feature of monetary policy, not a bug. The essence of forward guidance is communication about the conditions that would make policymakers change course."
