Federal Reserve Bank of Atlanta President Dennis Lockhart said Thursday he expects the Fed will be in a position to raise interest rates soon.
"I'm comfortable that conditions are appropriate for a rate increase in one of the coming meetings," he told reporters following a speech in Orlando, Fla. "It's a question of when, not if, we have a second move."
In his prepared remarks, Mr. Lockhart said he agreed with the Fed's decision last week to hold rates steady. He said, the postmeeting statement should be read as a willingness on the part of policy makers to take action in the near future.
"That phrase -- for the time being -- appeared in the statement suggesting, as I see it, that a change in policy could occur before long, " he said. "However, I did support the consensus view that, before taking the next move, it makes sense to see a little more evidence of progress toward our statutory policy objectives."
Economic projections released by Fed officials following the meeting indicate policy makers intend to raise rates once before the end of the year, likely in December.
The Atlanta chief said the 4.9% unemployment rate indicates the economy is close to full employment, signifying the labor market is functioning at full strength. But inflation has been running below the Fed's 2% target for more than four years, although the inflation rate excluding volatile food and energy purchases has risen to 1.6% lately.
"There is some difference of opinion among economists and my colleagues whether or not the core inflation shortfall is all that material," Mr. Lockhart said.
Mr. Lockhart isn't a voter on the Fed's policy committee this year. He has announced he intends to retire in February.
Growth has been weak in the first half of the year but Mr. Lockhart said he expected it to pick up in the third and fourth quarters and end the year at slightly below a 2% rate.
Labor productivity also has been weak during the recovery, he said, largely driven by weak capital investment. Effective workforce development programs can help raise longer term productivity and bring people back into the labor force, Mr. Lockhart said.
