JACKSON, Wyoming, July 11 (Reuters) - Federal Reserve officials on Friday said U.S. labor markets remain slack and inflation unlikely to accelerate, damping any sense that recent strong jobs and other data may prompt the central bank to raise interest rates sooner than expected.
Atlanta Federal Reserve Bank President Dennis Lockhart said in remarks prepared for an economic conference here that the U.S. is not yet in sight of the Fed’s inflation and unemployment targets and likely won’t raise interest rates until the second half of 2015.
Chicago Fed President Charles Evans, attending the same event and due to speak later in the day on a panel with Lockhart, said on Bloomberg television there were “many signs of resource slack” and that it may take a few years for inflation to reach the Fed’s 2-percent target.
Their comments come on the heels of a strong jobs report and a recent uptick in inflation. The Fed has also made steady progress on its plans to return monetary policy to a more normal post-crisis footing, clearing the decks for a return to higher interest rates.
Lockhart said he felt labor markets are recovering but still weak, and cited the large numbers of people who continue working part time despite wanting full-time jobs, and the low participation rates among prime-age adults.
“We will be in the zone of liftoff decision making when the outlook for accomplishment of the two objectives suggests they are in sight,” said Lockhart, who does not currently vote on the Fed’s main policy committee. “To cut to my bottom line, the FOMC is still somewhat short of the point.”
Reporting By Howard Schneider; Editing by Meredith Mazzilli