Fed's Lockhart: US rate hike path will be "gradual"


Ahead of the US Elections and at the time, when markets digest the NFP report, US rate hike is said to be "very gradual", according to Dennis Lockhart. Will we witness December rate hike?

4 November, AtoZForex The President of Atlanta Federal Reserve (Fed), Dennis Lockhart, has indicated the Fed rate hikes over the next two years to be “very gradual”, as the US government expects the steady growth and job gains figures.

 US rate hike path will be "gradual"

Stating the position of Fed as “very” gradual in relation to the interest rate raises, Mr. Lockhart did not point out to the likelihood of the December rate hike by the central bank. His prepared comments were published ahead of the NFP release earlier today.

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Fed Atlanta President stated that he felt the US economy stayed on track for near two percent steady growth, therefore letting the Fed raise the interest rates. He has added:

"I anticipate a very gradually rising interest rate environment over the next two years...I do not see rates marching higher for an extended period in a pre-programmed tightening campaign. The economy does not call for that, at least not at this time.”

While the central bank’s projects that the neutral interest rate for the US has dropped, Dennis Lockhart stated that housing and real estate sectors should not see the current cycle as "ominous."

Housing industry is expected to gain

The interest rates across the US are expected to remain below historical averages, where the housing sector can gain due to the fact, that millennials will start buying the houses. Mr. Lockhart has highlighted that any Fed rate hike would be based on the developments of the US economic growth, wage advancements, and the low unemployment figures. He further stated:

"When the rate environment does reach a steady state, mortgage rates should still be low and affordable by historical standards.”

Dennis Lockhart also has mentioned Fed’s steady progress in regards to its policy goals, calling the US October job gains “solid”.

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