Richmond Fed Prez: We're In A Recession, No Lower Interest Rates For You

Richmond Federal Reserve Bank President Jeffrey Lacker said Monday that he believed the U.S. was in a recession. (Yeah, join the club, buddy. We’ll go by the GDP results ourselves.)

Reuters: Richmond Federal Reserve Bank President Jeffrey Lacker said on Monday the U.S. economy was definitely in a recession but he believed it would be fairly moderate in size.

“We are in a contraction. Up until the summer it was a fairly mild recession,” Lacker, who will become a voting member of the Fed’s interest rate-setting committee next year, told reporters after a speech at the Hebrew University of Jerusalem.

“I think it’s definitely a recession at this point. How deep, how steep, and long it’s going to be is uncertain. We don’t know if it’s going to be a garden variety recession or something steeper. I think it’s most likely to be of a fairly moderate size,” he said.

Uh-oh, what if the garden grows a hydroponic recession?

Earlier, during a speech in Jerusalem, he also indicated he wasn’t a fan of the movement to lower the interest rate to zero. Of course, it’s not like his opinion matters, since he’s not a voting member of the interest rate-setting committee.

Reuters: “It is crucial that we not allow expectations of future inflation to ratchet higher during this recession,” the Federal Reserve Bank of Richmond president said in a speech at the Hebrew University of Jerusalem.

“As a recovery begins, the path of least resistance is often to hold the policy rate at a low level until it is completely clear that recuperation is complete,” ” he said…

Some critics argue the Fed’s policy of keeping rates at 1 per cent between mid-2003 and mid-2004 was partly responsible for fueling the housing boom and subsequent bust.

Lacker made a specific reference to this view in his speech and said he found it plausible; a clear hint that he may use his vote to push for rate hikes as growth picks back up.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.