Enter multiple symbols separated by commas

Fed's Lacker Says Volatility Alone Does Not Justify Rate Cut

Recent market turmoil only warrants a change in interest rates by the U.S. central bank if it hits the outlook for inflation or growth, Federal Reserve Bank of Richmond President Jeffrey Lacker said on Tuesday, noting that price pressures remain a worry.

"Financial market volatility, in and of itself, does not require a change in the target federal funds rate, in my view," Lacker said in a prepared speech to the Risk Management Association of Charlotte.

Interest rate policy needs to be guided by the outlook for real spending and inflation," he said in a speech to a business group.

"I believe there are still reasons to remain concerned about the risks to the inflation outlook," Lacker said.

"Financial turbulence has the potential to change the assessment of the appropriate rate if it induces a sufficient revision in growth or inflation prospects," added Lacker, not a voting member of the Fed's policy-setting committee this year.

He said there was certainly the risk that market woes could hurt consumer spending by forcing up the cost of credit, and acknowledged that the fallout for the housing market would probably reduce U.S. growth for the rest of this year.

But Lacker said he did not see a major blow to consumption.

"I still expect consumer spending to be reasonably healthy, and for business investment to continue to expand. But I expect overall growth to come in somewhat below its long-term trend for the remainder of the year, based on my expectations that the drag from housing will continue for some time," he said.

Lacker is a noted anti-inflation hawk on the Fed's policy-setting committee who dissented four times as a voter last year, favoring higher interest rates.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • The California property that once served as Michael Jackson's home and personal fantasyland is being listed at $100 million.

  • Lottery ticket

    A thief who broke into the car of a Seattle couple left behind a million-dollar lottery ticket, NBC News reports.

  • The Lamborghini SpA Urus SUV.

    There's no shortage of luxury vehicle choices, but increasingly the wealthy are opting for high-end SUVs instead of traditional models.

U.S. Video

  • Rates... what's normal? 3% the new 6%: Ed Keon

    This is a fundamental supply and demand story, says Ed Keon, QMA managing director, sharing his outlook on bond yields and demand for fixed income products.

  • This Day in History, May 29

    On this day in history, in 1978 first class postage increases to 15 cents, Columbia Records fires Clive Davis in 1979, and in 1992, Apple unveils the Newton MessagePad.

  • Hillary Clinton's next move

    CNBC's John Harwood reports the latest details on Hillary Clinton's campaign and her strategy for the 2016 presidential race.