Fed’s Lockhart: We can still hike in 2015

Wiliams said that although the Federal Open Market Committee (FOMC) had voted to hold rates at last week’s meeting, it was a close call and he expected a rate rise later this year. Both said they expected a hike this year. “As we have outlined, the domestic economy has the strength to withstand the external headwinds to growth“, notes TD Economics. “Even after a quarter-point increase, interest rates would remain exceptionally low, providing ample support for economic growth”, the official said.

Interest rates futures implied traders see a 41 percent chance the Fed will raise rates at its December meeting, up from 37 percent on Friday, according to CME Group’s FedWatch program.

The FOMC voted decisively last week to keep interest rates at the near-zero range where they’ve been held since December 2008.

CNBC is reporting that Atlanta Fed President Dennis Lockhart has stated that it was still possible that the Fed will hike its interest rate this year. “Tomorrow I’ll lay out a plan to take it on”, Clinton said on Twitter.

“The uncertainty is geared towards the global economy and not the US economy”, said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts. The broad Main Street economy is my essential concern.

Minneapolis Fed President Narayana Kocherlakota has long argued that the decline in market-based measures of the inflation outlook should play into monetary policy decision-making because it suggests that investors are losing faith in the central bank’s commitment to its 2-percent goal. These developments may restrain US economic activity somewhat and are likely to put further downward pressure on inflation in the near term.

Oil prices rose by more than 2 percent on Monday after data showed US drilling slowed. But Bullard thinks that 2% inflation could sneak up on policy-makers very quickly. Lacker, an anti-inflation hawk, dissented in favour of higher interest rates on Thursday.

Fed September rate decision was too discretionary, thought it was time for Fed to move. “The committee has not, in my view, provided a satisfactory answer to this question”.

Other Fed officials also indicated in recent days the decision was close. The Fed is scheduled to meet January 26-27.

Speaking in New York on Saturday, San Francisco Fed leader John Williams, another FOMC voter, agreed that a rate rise later this year remains “appropriate”.