Richmond Fed’s Lacker Sees Adjustments to Higher Rates Needed

Richmond Federal Reserve President Jeffrey Lacker, speaking on an economic outlook panel, said the Fed may need to raise rates more quickly than the Federal Open Market Committee statement’s implied three times. He notes there are a lot of uncertainties over the incoming administration’s policies and their impact on the economy. However, he’s heartened the president-elect is focusing on pro-growth strategies. Lacker said he had expected payroll gains would have slowed by now, noting it only takes about 60,000 monthly gains to match the growth in the labor force. He added it is hard to find examples of over-valuation in the markets, when asked whether cheap money has fostered distortions. He seemed satisfied with Wednesday’s tightening, saying adjustment toward higher rates is needed. Lacker is the first policymaker to speak publicly after Wednesday’s action, does not vote on the next year, but rotates into that status in 2018.

By Caroline Williams