(Adds quote from speech, Lacker's view of inflation; edits
July 8 Richmond Federal Reserve President
Jeffrey Lacker said on Tuesday that U.S. inflation has bottomed
out and is moving toward its target, with economic growth
continuing at a moderate pace.
Lacker said subdued productivity growth, moderate consumer
spending and a tempered expansion in housing construction will
likely keep U.S. growth at between 2 percent and 2.5 percent in
the near term - below his earlier forecast of something over 3
While Lacker, a policy hawk who has advocated for a faster
withdrawal of monetary stimulus, was cautious on his economic
outlook, he pointed to the threat of rising inflation.
By expanding its balance sheet, the Fed has flooded the
banking system with reserves, he said at an event in Charlotte,
Lacker said that at some stage, the economy will have
improved enough that banks could increase lending substantially,
leading to rapid deposit growth and mounting inflationary
"In order to prevent those pressures from emerging and to
keep inflation averaging 2 percent, we will need to begin
withdrawing monetary stimulus at the appropriate time. One way
to do that is to begin raising interest rates," Lacker said.
The Richmond Fed's president, who is not a voting member on
the Federal Open Market Committee this year, said that inflation
has averaged 2.5 percent over the last three months.
(Reporting by Michael Flaherty; Editing by Paul Simao)