The chatter from Federal Reserve officials is that we shouldn’t expect an increase in the Fed’s benchmark interest rates.
Even some previously bullish tinges in opinion now seem pretty nebulous.
“At some point in the future, we’re going to need to begin to adjust the language, to begin to see changes in the substance of the policy,” Atlanta Fed Bank President Dennis Lockhart told reporters after addressing a business group in Pensacola, Florida.
“The substance of the language, I continue to support,” [the substance being that it calls for keeping rates low for an ‘extended period’] he said, adding he was not calling for any immediate changes to it. Lockhart is not a voter on the Fed’s policy-setting Federal Open Market Committee this year.
Another senior Fed official, Richmond Fed Bank chief Jeffrey Lacker, said earlier this week that recent signs of recovery have led him to think that a muting of the extended period language should come “sooner rather than later.”
However, Lacker said on Thursday he did not see any pressing need to remove the phrase from the Fed statement yet.
“I’m comfortable with interest rates where they are now,” Lacker, also a non-voter, told reporters at a Fed symposium on credit markets in Charlotte, North Carolina.
One wonders if we’ll get anything this year given high employment expected to persist and the lack of high inflation. We feel that it’ll probably take a positive surprise on the U.S. GDP front to get a hike in 2010.
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