Thursday, April 1, 2010

Fed wants job gains before raising rate

Federal Reserve Bank of Atlanta President Dennis Lockhart wants to see signs that any gains in the U.S. job market will stick before he potentially supports an increase in the benchmark interest rate from a record low.
"There are hopeful, if tentative, signs of improvement in employment markets. We have a long way to go, and for that reason I believe it is premature to assume an imminent reversal of the Fed's (low interest rate) policy," Lockhart said in a speech on Wednesday in Hartford, Conn.

Lockhart and his Fed colleagues are grappling with when and how fast to raise interest rates after 8.4 million U.S. job losses since December 2007 helped push up the national unemployment rate to a near 26-year high.

Lockhart said the Fed's stance on interest rates is "appropriate at present."

The nation must add about 200,000 jobs a month for the next year to reduce unemployment by a full percentage point under an Atlanta Fed estimate. Lockhart said he doesn't expect the U.S. economy to relapse into recession, though.

"I am quite confident that we're going to see a continued, sustained recovery," barring a shock that arrives "out of the blue," he said.

Mortgage Rates Drop Slightly in Freddie Mac Weekly SurveyJobless rate high but steady at 10.7 percent