Also in this playlist...
This transcript is automatically generated
Welcome to foxbusiness.com.
We're continuing our conversation with Dennis Lockhart the president of the Atlanta Federal Reserve Bank out here at the annual Kansas City Federal Reserve.
Conference in Jackson Hole Wyoming oh thanks for joining us once again -- you -- Dennis.
-- on on the business -- -- a moment ago we're talking about the economy and and tapering the Fed's bond purchases.
But one of the variables.
Indicators -- you have to be watching that you are watching is inflation.
What about inflation right now.
And what what impact will the inflation outlook have on your -- your decision.
On whether or not to start treatment.
Inflation as you know is running below.
The F policies toward.
So we've been watching very carefully and we had been taking soundings.
Of our contacts mostly in my case in the -- -- As to signs of disinflation or sign is.
Falling price cuts are things that would suggest that.
First the economy is weaker than maybe we're measuring her weaker than we -- And secondly that inflation might be headed really toward a a deflationary threshold of some kind.
We do not pick up at the moment any indications of that worrisome disinflation taking place.
And a very recent readings.
Of inflation both headline and core.
A little bit of a pick up inflation and a new meaning it's so inflation is running -- a little faster pace so.
At the moment I'm reasonably comfortable.
Now it is a fact it's below are chart.
And it's in all likely gonna take a while before we get back to something close to our target.
And there are consequences of inflation running too low so.
It's it it's something to watch carefully but at that at this moment I'm not let's say overly concerned.
But as you know some of your colleagues Jim -- -- Asia -- -- Saint Louis fed has said.
That the Fed must defend -- 2% target and when it when it's running -- -- that may mean.
Keep up the stimulus keep up the quantitative easing.
Your -- your thoughts about that I.
I think the you know -- the principle of defending the 2%.
Makes sense if you are actually seeing -- disinflation.
And -- let's say that some concern about deflation is developing.
But I don't believe were saying that the moment so I don't think this is a moment in which we have to defend.
And set policy particularly quantitative easing her or -- -- -- policy on the basis of inflation readings.
One of the issues that.
That we're addressing are going to be hearing about here in case and Jackson Hole.
The debate about the proper mix of the tools that the -- can use for.
-- tightening quantitative is easing is one of them the other big one is.
Is low interest rates.
Right now there near zero.
And this tool of so called forward guidance that basically meaning that the Fed promises to make -- makes promises.
Keeping rates low for a certain period of time under certain.
In the minutes.
For the July meeting you all had a discussion about whether or not you might want to change the forward guidance -- a lot of investors.
Decisions about their investments their businesses.
There economic decisions.
Art is that they -- getting ready to change the forward well.
We had a discussion and that's really all I can say at the moment I don't want to get ahead of committee deliberations on this -- -- from my perspective.
-- and gave a range of possible forward guidance statements that could be used as real monetary policy tools is valuable.
It's it's gives us some some options and so -- At least in principle -- of the ideas that.
We use forward guidance.
Aggressively if necessary and it is it alternative to.
Other policy measures.
And analysts and and forward for example the current forward guidance is is that the Fed will keep.
The Fed Funds rate the short term rate.
Low at least until the unemployment rate hit six and a half percent or.
And as -- inflation isn't running about two and a half percent is basically it in a nutshell.
Is it possible that that the Fed could decide that maybe.
Five for five and a half percent or 6% unemployment rate would be a better target to give people more assurance that that.
Low rates are going to stay in place for.
A longer period.
I don't speculate -- on the specifics.
Well -- -- speciality.
But I you know I think for the moment should simply say -- forward guidance is out there at the six and a half percent two and a half percent inflation -- -- Stands.
I think it's good guidance.
And according -- my outlook for my forecast.
We still see that as probably sometime in 2015.
Is as -- timing of the change.
Because that's about when we might -- six and a half percent.
We have a leadership.
Change coming here at the -- Is that having an impact.
On policy in your view.
I guess I should say first a leadership change is presumed.
Nothing actually had been announced and if the president were asked.
Chairman Bernanke to to stay on I don't know what his answer would be but it's quite possible he would.
But assuming that he he is going to -- lead.
The a succession.
Debate in the press and so forth.
Really is not a factor policy.
I don't -- thing I don't think so no not at all I I I am observing it.
As I think my colleagues are.
In a way.
Adjacent to our policy making but not really having an influence on policy why is that is that because the -- has kind of -- Laid out pretty clearly over the it's certainly -- a path has been mentioned by the chairman chairman Bernanke.
But but I think that to the principal reason is it's consensus process and so that.
That it chairman of the Federal Reserve is very no question very very influential but is not a dictate.
And in that sense the committee will meet and come to a consensus and and I don't think the succession questions factor into to policy questions.
That's -- Atlanta Federal Reserve thanks for joining us once again Peter -- fox business and we got a breakfast Arafat Andre Agassi.
Filter by section