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Atlanta Federal Reserve bank president Dennis Lockhart said on Wednesday that the United States remains on track for a likely interest rate hike in the June to September period, with a weak first quarter likely to give way to stronger growth.
"The weakness of the first quarter got my attention. I still believe the factors are transitory," Lockhart told reporters at a monetary policy conference here. "We will see a pick-up."
Fed policymakers and many analysts cut their U.S. growth projections after a first-quarter slowdown that stemmed in part from the hit U.S. energy companies are taking from low oil prices, and the hit exporters are taking from a strong dollar.
Fed officials say they remain convinced that the economy has enough underlying strength for the recovery to continue, and that cheap oil will ultimately be a boon to the economy, felt through increased consumer spending and higher company profits.
Lockhart said he will be paying particular attention to employment indicators in coming weeks.
Though the unemployment rate has been dropping, and at 5.5 percent is near some traditional estimates of full employment, many Fed officials feel slack remains in the labor market in the form of high numbers of part-time workers, and those on the sidelines who may want jobs.
"There still remains a not insubstantial amount of slack," in the labor market, Lockhart said.
Lockhart is considered a centrist on a Fed that has opened the door as of its June meeting to its first rate increase since 2006. Rates have been effectively at zero since 2008, when the United States was in the midst of a financial crisis and recession.
When rates do rise, the Fed will rely on a series of new tools, such as paying banks interest on excess reserves and offering overnight repurchase agreements with money market funds.
Lockhart said he was confident those methods will work, and give the Fed control over short-term rates - and ultimately the broader cost of credit.
"I believe the Fed will have substantial control over the short-term rate curve," Lockhart said.