hurricanemaxi
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 Posted: Mon Dec 19, 2011 5:13 pm Post subject: Fed’s Lacker Predicts Moderate 2012 Growth |
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Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow 2 percent to 2.5 percent next year, with inflation likely to meet central bank goals, and urged no additional stimulus.
“I am hard-pressed to see the rationale for any further monetary stimulus” with growth at 2 percent or higher and inflation around 2 percent, Lacker told reporters after a speech today in Charlotte, North Carolina. “Recent economic news in the U.S. has been positive for a couple months now” while prospects in Europe have been “deteriorating,” he said.
Lacker said he was “very comfortable” with the tone of last week’s Federal Open Market Committee statement, which said the economy was expanding moderately despite “apparent slowing in global growth,” while adding that market strains pose “significant downside risks.” Fed Chairman Ben S. Bernanke said Nov. 2 that additional stimulus “remains on the table,” such as buying mortgage bonds or changing the way the Fed communicates its policy goals to the public.
Recent data, including a drop in initial jobless claims to the lowest in three years, have prompted economists to raise their forecasts for the fourth-quarter growth rate. For example, Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, on Dec. 16 raised his forecast to 3.5 percent from 3 percent.
Communications Discussion
Asked about communications discussions of the policy committee, Lacker today reiterated his call for an official inflation target.
“Inflation is terribly important as a central bank goal and I think we owe the public a commitment to an announced objective for inflation,” he told reporters. “We have been having a lot of conversations. I can’t speak for the committee.”
A recent cooling in prices “is likely to prove as transitory as did the acceleration we saw earlier in the year,” Lacker said in his speech to the Charlotte Chamber of Commerce economic-outlook conference. “Despite this year’s run-up, I believe the inflation outlook is reasonably good” though “I still view the risks to inflation as tilted to the upside.”
In response to audience questions, Lacker said yields on U.S. Treasury securities have fallen because of a “flight to quality” with greater concerns internationally.
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