“Liftoff will soon be appropriate,” Lockhart said in remarks prepared for delivery Thursday in Bern, Switzerland.
“Liftoff remains a close call,” he said, though he also cautioned that “revisions in my forecast of how quickly remaining output and inflation-target gaps might close could quite easily point to a longer period for a zero funds rate.”
Fed Chair Janet Yellen told Congress this week that the U.S. economy was performing well and that a December rate hike is a “live possibility.” The U.S. central bank has held its benchmark federal funds rate near zero since December 2008 to help spur growth and hiring amid the deepest recession since the Great Depression.
Lockhart, a voting member of the policy-setting Federal Open Market Committee this year, discussed the use of monetary policy guidelines such as the Taylor Rule, arguing the Fed was moving from a period of emergency policy settings to one where normalization would become more appropriate.
“New risks or uncertainties may well color future decisions in a way that will justify continued deviations from the simple prescriptions of a Taylor framework,” he told a central bank conference. “But it is apparent to me that we are in the midst of transition from an extraordinary period that called for unconventional tools, to a period where we again utilize rule- like benchmarks.”
Lockhart said earlier this year he had expected to support liftoff in September. Financial turmoil and a slowdown in Chinese growth created risks that made it “prudent” to delay, though “it was a close call.”
“I expect to see a subsiding of the risks that appropriately led, in my opinion, to a policy hold in September and October,” he said. “I think the case for liftoff will continue to firm up.”
The Atlanta Fed leader reviewed recent labor market indicators and said he favored a “dashboard” approach that doesn’t rely on a single figure such as the unemployment rate. Overall, labor market slack has been “substantially, but not completely, closed,” he said.
Payrolls rose by an average 139,000 per month in August and September, well short of the 213,000 monthly gain in the first half of this year. October’s report, to be released Friday, is projected to show an increase of 185,000, according to the median estimate of economists surveyed by Bloomberg.
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