The U.S. Federal Reserve may be heading for a "slow ... halting" effort to raise interest rates after it begins its first tightening cycle in about a decade, Atlanta Fed President Dennis Lockhart said on Thursday.
Speaking less than a month before the U.S. central bank is widely expected to raise rates from the current near-zero level, Lockhart said he is "comfortable with moving off zero soon," barring an unexpected downturn in the economic outlook
The Fed's targets for the U.S. labor market have largely been met and its price goals should be met over time, he said in prepared remarks to the DeKalb Chamber of Commerce in Atlanta.
But that doesn't mean the U.S. economy is in the clear, or that it will function as it did before the 2007-2009 financial crisis, Lockhart said. There are "serious concerns" about the global outlook, he said, and lower trend U.S. economic growth may mean the Fed's target "equilibrium" interest rate may be lower than in the past.
Lockhart said the central bank would need to be cautious as the debate over how fast to continue raising rates unfolded after an initial hike.
"The pace of increases may be somewhat slow and possibly more halting than historic episodes of rising rates," Lockhart said. "Moreover, to the extent the evolving economic picture allows a process leading to a 'resting place,' that point might be lower than in the past, as implied by a somewhat lower trend rate of economic growth."
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