Time to move on interest rates, Fed's Lacker says

The direct implications of the recent market turmoil for the US economy “appear to be quite limited”, according to a top US policymaker.

“I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” Jeffrey Lacker, the president of the Federal Reserve bank of Richmond said in the text of a speech delivered on Friday.

“It’s time to align our monetary policy with the significant progress we have made.”

Lacker, a well-known ‘hawk’, argued framed his arguments in terms of labour market slack which has been cut back to pre-recession levels and shorter-term inflation gauges which were moving in the direction of the monetary authority’s 2% target.

“It’s time to align our monetary policy with the significant progress we have made,” he said.

His remarks came amid some ex-Fed officials concerns amongst other reasons due to the fact that futures markets have persisted in refusing to discount a September rate rise by the Federal Open market Committee.