A voting member of the US Federal Reserve’s policy committee said Friday that he believes the economy is on a satisfactory track and that an increase in interest rates is likely to be appropriate in either October or December.
Dennis Lockhart, president of the Fed’s Atlanta regional bank, said the economic data has been giving off mixed signals and there is more ambiguity in the data than there was a few weeks ago.
Lockhart said he will be watching consumer activity closely before he makes his decision on whether to raise rates at one of the Fed’s two final meetings of 2015.
”I continue to feel that cumulative progress is consistent with liftoff relatively soon,” Lockhart said his remarks to the annual meeting of the Society of American Business Editors and Writers.
The Fed has kept its key interest rate at a record low near zero since December 2008.
Lockhart’s views on the timing for a rate hike have been closely followed because he is one of five regional bank presidents with a vote this year on the Federal Open Market Committee, the panel of Fed bank presidents and Washington board members that meets eight times a year to set interest rate policy for the central bank.
The next meeting of the committee will be Oct. 27-28 and the final meeting of the year will occur on Dec. 15-16.
Many private economists believe that a weak jobs report for September released last week makes an October move unlikely, but many are still forecasting a rate hike in December.
When the Fed starts raising rates, something it has not done in nine years, it will mean higher rates for consumer and business borrowers. But central bank officials, including Fed Chair Janet Yellen, have stressed that the rate hikes are likely to be very gradual, meaning rates will remain near historic lows for some time.
Many had expected the first rate hike to occur in September, but minutes of that meeting released Thursday revealed concern among Fed officials about a significant slowdown in China, which roiled markets in August. The thought was that China’s problems could have a more severe impact on the U.S. economy than they had forecast. The Fed voted 9-1 at that meeting to keep rates unchanged.
Lockhart said that trying to interpret the recent twists and turns in the economy has been like riding a roller-coaster.
”The ambiguity of the moment reinforces the need to closely watch the vital signs of the economy over the coming weeks to determine if the outlook has changed,” Lockhart said.
Before the December meeting the Fed will have data on the October and November employment numbers, inflation data for September and October and the first two estimates for overall economic growth in the third quarter, Lockhart said.
Data on consumer spending, he said, will be the most important.