Richmond Fed President says Fed Rate Hike could come before 2014

The Federal Reserve may need to raise official interest rates before late 2014, Richmond Fed President Jeffrey Lacker said on Friday, justifying his dissent against the central bank’s latest decision.

The Fed left its monetary policy on hold this week, but sent a strong signal that it was considering another round of bond purchases if recent economic weakness persists.

Policymakers also reiterated their view that the Fed’s benchmark overnight interest rate, currently near zero, would stay at those rock bottom lows until at least late 2014.

But Lacker, who has dissented at every meeting this year, stepped up his opposition to the date-specific forward guidance approach.

“I believe that exceptionally low federal funds rates are not likely to be warranted for this length of time,” said Lacker, a prominent inflation hawk, in a statement.

“My assessment is that significant uncertainty regarding the evolution of economic conditions over the next few years makes the future path of interest rates difficult to forecast.”

via Reuters

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