Expects 2.5% to 3% US growth
Atlanta Fed Dennis Lockhart (FOMC voting member in 2015), is speaking in Detroit (see prior comments from a CNBC interview). He has been more of a dove in the past, but seems to be getting in line for a lift off in the June/July/September period.
He adds:
- the economy is strong enough to absorb rate normalization.
- Rate liftoff is coming.
- Is not overly concerned liftoff would be an error.
- Sees only a low chance fed would have to backtrack
- economy can handle moving to higher rate environment
- wants to ensure that once the Fed starts to normalize rates, that the Fed can move deliberately
- stronger dollar will impact US exports/effects are showing up and manufacture
- Roll of dollar has to be watched very carefully
- markets dictate dollar level
- no plans for the fed to react to the rising dollar, but will take dollars impact on the growth into account (HMMMM)
- Unwise to very rapidly shrink fed balance sheet. Timeline to shrink balance sheet is 5 to 6 years (this is something new from what I remember).
- Q1 looks weak - especially manufacturing, but transitory
- job growth tells us US economy in decent shape
- consumers are cautious spending gains from oil.
- don't believe exact liftoff timing matters
The comments are towing the party line that there will be a liftoff in 2015.....sometime. The expectation from the Fed is that a 25 basis point rise or two will not have a major impact on the economy. However, if the dollar continues to strengthen, that may be a cause for concern. So I would expect the jawboning to continue with respect to the dollar in an attempt to slow it's rise. Do one thing. Talk about the other. .
