4 Feb 2014
Fed's Lacker: QE taper to continue despite sluggish growth prospects
FXStreet (Łódź) - Richmond Fed President Jeffrey Lacker suggested on Wednesday that the US economy would grow at a slow pace this year, but that the Fed's reduction of bond purchases would continue according to plan.
"My suspicion is that we will see growth subside this year to closer to 2 percent, about the rate we've seen since the Great Recession," the Fed policymaker said, speaking at a university in Virginia.
He also predicted that US inflation would rise towards the central bank's target of 2% in one or two years' time. Employment creation should remain muted for a few more years, he stated, mainly due to a mismatch between the workers' skills and what the employers need.
Moreover, Lacker predicted that the first interest rate hike would take place at the beginning of 2015 and stressed that a drop in the unemployment to 6.4% would not automatically trigger a rate increase.
Jamie Coleman comments on FXBeat: “I think part of the market's 'problem' of late is that it no longer expects the Fed to come to its aid at the first sign of trouble. It is beginning to become sink or swim time.”
"My suspicion is that we will see growth subside this year to closer to 2 percent, about the rate we've seen since the Great Recession," the Fed policymaker said, speaking at a university in Virginia.
He also predicted that US inflation would rise towards the central bank's target of 2% in one or two years' time. Employment creation should remain muted for a few more years, he stated, mainly due to a mismatch between the workers' skills and what the employers need.
Moreover, Lacker predicted that the first interest rate hike would take place at the beginning of 2015 and stressed that a drop in the unemployment to 6.4% would not automatically trigger a rate increase.
Jamie Coleman comments on FXBeat: “I think part of the market's 'problem' of late is that it no longer expects the Fed to come to its aid at the first sign of trouble. It is beginning to become sink or swim time.”
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