Fed's Lockhart Says A Decision Looms

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Fed’s Lockhart Says “Policy Decision Looms”

Atlanta Fed President Dennis Lockhart, who is a voting member of the FOMC this year, said in a speech Friday that "another policy decision looms" for the Fed and that the central bank "may confront a decision on whether or not to respond more aggressively to the economy's apparent weakness".

If the economy continues on the track indicated by the most recent incoming data and information, that forecast will become untenable, as will the policy premises underlying it,” Lockhart said.

Lockhart added that the FOMC is divided into two camps at the present time: those who support taking more action “now or before too long” and those who think the option should be “held in reserve to respond to a sharp further deterioration in the outlook.”

However, Lockhart also warned that Fed policy is not a panacea. “We should have modest expectations about what further action can accomplish,” he said.

But in defense of the Fed’s policy efforts, Lockhart added, “I do not think this means monetary policy is impotent or has reached its limit.”

Although the Fed has historically displayed a tendency to avoid major policy decisions during an election year, many investors continue to expect to see Mr. Bernanke announce another round of quantitative easing at the next FOMC meeting on July 31-Aug 1.

Hope for more stimulus in both the U.S. and China have been cited as reasons for Friday’s impressive stock market rally.

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Other stories on the US Economy to review:

• PPI Up in June
  
• Import/Export Prices Down in June
  
• NFIB Small Business Optimism Index Pulls Back Again
  
• Jobs Report Disappoints Again in June
  
• ISM Non-Manufacturing Index Disappoints in June
  
• ADP Employment Surprises to Upside
  
• Challenger Planned Job Cuts Best in Year
  
• Factory Orders BTE in May
  
• Construction Spending Above Consensus in May
  
• ISM Manufacturing Plunges in June
  
• Chicago PMI Headline Improves But...
  
• US GDP Grew at +1.9% Rate in Q1
  
• Durable Goods Up for First Time in 3 Mos
  
• Richmond Fed Index Declines for Third Month
  
• Consumer Confidence Falls Again in June
  
• Case-Shiller Home Price Index Improves
  
• Chicago Fed National Activity Index Falls in May
  
• Existing Homes Sales Fall But Prices Rises
  
• LEI Rises in May: Points to "Muddle Through"
  
• Philly Fed Plunges in June
  
• Housing Starts Down But Permits Up
  
• Industrial Production and Capacity Utilization Below Expectations
  
• Empire Manufacturing Disappoints in June
  
• CPI Declines in May
  
• Business Inventories Above Expectations in April
  
• Retail Sales Fall Across Board in May

 

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