ATLANTA CITY, N.J. — Federal Reserve Bank of Atlanta president Dennis Lockhart indicated Monday he could vote for additional monetary easing under certain circumstances, but is not presuming the need for either further easing or tightening of monetary policy this year.
Lockhart, who will be voting on the Fed’s policymaking Federal Open Market Committee this year, anticipated real gross domestic product growth of 2.5% to 3% coupled with inflation near 2% in 2012. He said this assumes a continued “supportive monetary policy” and the absence of significant new negative shocks from Europe or elsewhere.
Lockhart said his outlook implies a “reluctance” to change monetary policy “in either direction,” but added he doesn’t want to take a “rigid” position. Given the slow pace of progress in bringing down unemployment, the FOMC must at least consider additional monetary stimulus, he said in remarks prepared for delivery to the Atlanta Rotary Club.
Those comments were premised on a cautious and uncertain outlook.
Taking note of the pickup of consumer spending in late 2011, Lockhart said, “I question whether this consumer spending momentum will be sustained without a pickup in income growth.” Consumers have been reducing their debt burdens, but the process of achieving full health in household finances “will take longer,” he said.
Likewise, “much progress has been made but the financial system is not yet back to full strength,” he said. “We can’t really have a healthy economy without a strong banking and financial sector.”
