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Fed's Lacker: Here's why I dissented at last FOMC vote

Federal Reserve Bank of Richmond President Jeffrey Lacker
Kevin Lamarque | Reuters
Federal Reserve Bank of Richmond President Jeffrey Lacker

Richmond Fed President Jeffrey Lacker said Friday the U.S. economy is strong enough to handle a Federal Reserve rate increase, the reason for which he dissented at the last Federal Open Market Committee meeting.

"My reasoning was based on my belief that with the steady growth in output and household spending that we have been observing — and expect to continue — the real (inflation adjusted) rate of interest should be higher than its current level of less than negative 1 percent," Lacker said in a statement.

On Wednesday, the Fed voted to keep interest rates near zero.

"My assessment was also supported by labor markets that had tightened considerably and my confidence that inflation will return to our 2 percent objective after the temporary effects of low energy and import prices have passed," he said.

Lacker was also the lone dissent at the FOMC's September meeting, which saw the Fed keeping rates low — in part — because of global growth concerns.

"I did not believe at the time that the uncertainty stemming from those events was sufficient to justify further delay in policy normalization," Lacker said Friday. "The data we have received since the September meeting have strengthened my confidence that those events are not likely to change the medium-term outlook for U.S. growth and inflation."