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Jeffrey M. Lacker, president of Richmond FED had been the only hawk last Wednesday, when policymakers chose to maintain current monetary policy accommodation by 9-1 vote.
In a speech today, Mr. Lacker explained, why he dissented in last policy asking for an immediate rate hike.
- According to Mr. Lacker, US economy is strong enough to handle a rate hike and with current steady growth in output and household spending which is expected to continue real rates should move towards positive territory.
- He drew labour market tightening to his argument as he believes this will lead to inflation goal as effects of lower energy prices dissipate.
Mr. Lacker was a dissenter in September meeting too as he clearly believed that FED got influenced by financial market turmoil and global economic developments, which he believed would be less influential to US economy and recent data since then have strengthen his belief.
Since last meeting, probability of a December hike has risen above 50% from around 36% before the meeting as tone of the FED commentary has moved towards hawkish side.
