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Fed's Lockhart sees rate hike at least six months after QE3 end

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[March 26, 2014]  By Jason Lange

ATLANTA, Ga. (Reuters)  The U.S. Federal Reserve will probably wait to hike interest rates until at least six months after it ends its bond-buying stimulus program, a top Fed official said on Tuesday.

"(I) think that it's going to be longer than that," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told an investment conference.

The Fed has kept overnight interest rates near zero since late 2008 to help the U.S. economy recover from a profound recession.

Signs of recovery in the jobs market led the U.S. central bank to recently start winding down its bond-buying program, which is aimed at pushing down borrowing costs. The Fed has made clear it will continue to support the economy, and last week said it would keep its benchmark rate near zero for a considerable time after it ended the bond purchases.

Lockhart was commenting on a statement by Fed Chair Janet Yellen last week that a considerable time meant around six months.


"That is a really a minimum, not a maximum," Lockhart said, while qualifying his remarks as representing only his personal view.

Yellen, in a press conference following the first Fed policy meeting that she chaired, said the Fed will probably end its bond-buying program  known as QE3 because it is the Fed's third round of bond buying  next fall.

Some investors took Yellen's comments to mean the Fed could raise rates as soon as April.

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Lockhart, who does not have a vote this year on the Fed's policy-setting panel but participates in its discussions, is considered to be near the center of the central bank's policy spectrum, and his comments often reflect the views of the core decision-makers.

On Tuesday, he said he remained troubled by persistently low rates of inflation in the United States, although he expects the pace of economic growth will pick up in the coming months. That outlook is the fundamental reason why the central bank will want to raise rates next year, he said.

(Reporting by Jason Lange; editing by Leslie Adler)

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