Fed's Lockhart sets high bar for possible June rate hike

File photo of President of the Federal Reserve Bank of Atlanta Dennis Lockhart during a Bloomberg interview. PHOTO: BLOOMBERG

CHICAGO (REUTERS) - A top US monetary policymaker on Thursday (April 14) made it clear he would not support a rate hike this month and set a high bar for supporting any move even at the Federal Reserve's June meeting.

Slower-than-expected US economic growth and inflation that is not yet clearly firming mean that caution and patience is"the right posture" for monetary policy, Atlanta Fed President Dennis Lockhart told reporters after speaking a CFA Institute symposium in Chicago.

Mr Lockhart said that to support a June rate hike he would need to see economic growth rebounding fast enough to make 2 per cent growth for the year a probable outcome, and continued monthly job gains of 200,000.

There should also be more evidence that inflation is firming, he said, and no deterioration in inflation expectations which for now are anchored near the Fed's 2 per cent target.

"Certainly I think June should remain an option," he said.

Mr Lockhart's explicit four-point wish list is unusual for a Fed official, and underscored concerns that Fed chair Janet Yellen has also expressed about the staying power of a US recovery in the face of global weakness.

Fed officials raised rates in December for the first time in nearly a decade, a move Mr Lockhart supported, but have left them at a range of 0.25 per cent to 0.5 per cent ever since as they assess how a global slowdown might affect the US economic outlook.

US unemployment is at a healthy 5 per cent, but growth in the first quarter appears to have slowed dramatically from the fourth quarter's 1.4 per cent pace. The Atlanta Fed's estimate of first-quarter growth is 0.3 per cent. And while inflation showed signs of healthy acceleration earlier in the year, a report earlier on Thursday showed prices rose less than expected in March.

"One reason I am let's say supportive of a patient and cautious posture is because I don't think the (Fed) is behind the curve particularly as it relates to inflation," Mr Lockhart said.

The British vote on whether to exit the European Union just days after the Fed's June meeting "certainly has to be something that we have on our minds" Mr Lockhart said, but "I don't think that question should completely stop the music for monetary policy setting the US"

Still, Mr Lockhart told Bloomberg Radio earlier in the day, there is still time this year for two or even three rate hikes.

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