Tags: Fed | Lacker | economy | growth

Fed's Lacker Sees Disappointing Growth for Years to Come

Wednesday, 26 Jun 2013 03:32 PM

 

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Federal Reserve Bank of Richmond President Jeffrey Lacker said he expects the U.S. expansion to remain “sluggish” for “a couple more years,” and Wednesday’s downward revision to first-quarter growth is in line with his outlook.

Lacker said he sees growth of about 2.25 percent next year. Gross domestic product expanded at a 1.8 percent annualized rate from January through March, down from a prior reading of 2.4 percent, the Commerce Department said.

“The economy is telling us this is about all we’re capable of right now,” Lacker, who doesn’t vote on the Federal Open Market Committee this year, said in a Bloomberg Television interview with Peter Cook. “We’re going to continue to get growth at a fairly disappointing rate going forward.”

Policymakers are considering when to end the biggest stimulus program in the Fed’s 100-year history after pushing central bank assets to a record $3.47 trillion through quantitative easing. Chairman Ben S. Bernanke said June 19 the Fed may trim its $85 billion in monthly bond buying this year and end it around mid-2014 if the economy grows in line with the central bank’s forecast.

Bernanke’s comments pushed down stocks and bonds. Since the day before his remarks the Standard & Poor’s 500 Index has fallen about 3 percent, while the yield on the 10-year Treasury note rose to an intra-day high of 2.66 percent from 2.19 percent.

Lacker, who dissented in September 2012 against the announcement of a third round of bond purchases by the Fed, said he would be “fine with us tapering it off right now.”

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