8 September, AtoZForex.com, Lagos – September is finally here and murmurs about rate hikes are growing louder. On Friday, Richmond Fed President Jeffrey Lacker opined that the condition of the US labour market is such that warrants interest rates to begin being hiked.
Jeffrey Lacker is known as a proponent for for rate hikes since June and has again reiterated that the US economy no longer needs rates at zero. “It’s time to align our monetary policy with the significant progress we have made,” Lacker said in prepared remarks titled “The Case Against Further Delay.”
No change of monetary policy
Following the release of the NFP report on Friday, Lacker called the labor market “good” and said it did not change the outlook for monetary policy. Even though it is generally expected that the jobs report would be critical for the central bank’s decision over whether to raise rates this month. “It’s quite unlikely that a one-month blip would materially alter the labor market picture or, for that matter, the monetary policy outlook,” he said.
He also pointed to the strength in consumer spending as the strongest evidence supporting higher rates. In another statement he made clear that this was probably attributable to stronger earnings by families and expectations the economy would continue to improve.
Friday’s NFP figures generally disappointed, falling short of broad forecasts. A strong report was expected to hint largely on rate hikes to come in September, but the disappointing 173k figure against forecast of 215k added to the confusion. On the other hand, the unemployment rate fell more than expected and the average working week increased, as well as average hourly earnings continued to rise at the same annual pace as before.
The much-awaited NFP confuses markets further, as it was expected to settle the question of whether the Fed would hike in September, but in the event they were neither good enough to guarantee that the Fed would move nor bad enough to rule out a hike.
Further justifying his opinion that rates due for hikes, he said: “over the last year or so, reports of difficulty finding and hiring qualified workers have become notably more widespread and persistent,” referring to reports in his region.
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