Federal Reserve Bank of Richmond President Jeffrey Lacker said the U.S. economy will probably grow just 2 percent next year, with no new source of strength.
“My outlook is for something around 2 percent, pretty close to 2 percent next year,” Lacker said to reporters after a speech in Charlotte, North Carolina. “My baseline doesn’t have a pickup in growth next year. I just don’t see where it is likely to come from.”
Lacker’s forecast is far below the 2.9 percent to 3.1 percent estimate among Federal Open Market Committee participants at a Sept. 17-18 meeting. Economists in a Bloomberg survey last week predicted a report will show the economy expanded 2 percent in the third quarter, down from 2.5 percent the previous quarter. The Commerce Department plans to release its initial estimate of third-quarter growth on Nov. 7.
Lacker affirmed his call for a reduction in stimulus, saying gains from the central bank’s $85 billion in monthly bond purchases are “uncertain.”
The Richmond Fed chief dissented against every FOMC decision in 2012 and doesn’t vote on policy this year.
A partial shutdown of the government reduced growth by 0.3 percentage point this quarter, according to the median estimate in an Oct. 17-18 Bloomberg survey. The impact from the shutdown will prove “transitory,” Lacker said to reporters.
The Fed’s asset purchases, or so-called quantitative easing, probably won’t give the economy much of a boost, Lacker said in response to audience questions.
“Our ability to provide stimulus through balance sheet expansion is uncertain,” he said, warning inflation may surge because of excessive bank lending sometime in the future.
Lacker, 58, has been president of the Richmond Fed since 2004. He was previously the regional bank’s director of research. His district includes Maryland, Virginia, North Carolina, South Carolina and most of West Virginia.
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