U.S. ECONOMICS: Atlanta Fed President Dennis Lockhart Expects 2014 Jobless Rate to Be "Well Short of The Goal"
Speaking at Auburn University today, Atlanta Fed President Dennis Lockhart (non-voting) addressed issues concerning the partial government shutdown and the outlook for Fed policy.
Lockhart, considered one of the more dovish members of the Fed, believes that the government shutdown will make coming data "less reliable" than might otherwise have been, until at least December. But, he says, recent data has indicated that the employment situation still has a "way to go" to meet targets. He adds that inflation is also too low and well below the Fed's target rate. As a result, while Lockhart sees an improved economy in 2014, he fears employment will continue to grow at an "unspectacular pace", and GDP is likely to be only in the 2.5% to 3% range.
Regarding Fed policy towards QE and a possible taper of asset purchases, Lochart believes that Fed policy will depend on "circumstances and the economic diagnosis of the moment", echoing similar comments from other Fed officials that the decisions by the Fed are data-dependent.
The reaction by the fixed-income market has been negligible given Lockhart's monetary bias and avoidance of comments more specific to when the Fed could taper. Yields are trading in a very narrow range, 2-3 basis points higher than on Monday.