Central Banks

Fed's Lockhart: Hike possible as early as April

Fed's Lacker confident about inflation target

The Federal Reserve could hike interest rates as early as next month, Atlanta Federal Reserve President Dennis Lockhart said Monday.

The Federal Open Market Committee's "patient approach" in keeping its interest rate target unchanged last week made sense, he said in prepared remarks for the Rotary Club of Savannah. The FOMC next meets on April 26 and 27.

Lockhart, who does not vote on the committee, said he expects continued job market improvement this year. He said he is optimistic the Fed's 2 percent inflation target is possible in the medium-term.

Earlier on Monday, Richmond Fed President Jeffrey Lacker took a similar tone on inflation, saying it will likely accelerate in coming years and move toward the Fed's target.

Jeffrey Lacker, president and chief executive officer of the Federal Reserve Bank of Richmond.
Andrew Harrer | Bloomberg | Getty Images

Inflation has been unusually sluggish since the 2007-2009 recession.

The Fed has kept interest rates low in part to foster faster price gains and said last week it was likely to raise interest rates more slowly than policymakers had expected in December.

The U.S. central bank noted in its Wednesday policy statement that financial market-based measures of expected inflation were low.

"Although recent declines in inflation compensation do give me some pause, I think the evidence indicates that inflation expectations ... remain well-anchored," Lacker said at an international central banking conference in Paris. He cited studies that suggest public expectations of inflation guide actual price changes.

Federal Reserve Bank of Richmond President Jeffrey Lacker
Lacker: Fed audit 'high-frequency harassment'

Lacker, known as a hard-liner on the Fed's duty to keep inflation from running much above 2 percent, said U.S. inflation was bound to increase significantly after the price of oil bottoms out. He said inflation outside food and energy would move back toward 2 percent once the U.S. dollar stops appreciating.

Lacker is not a voting member on the Fed's rate-setting committee this year but participates in its discussions.

for the latest on the markets.