Atlanta Fed's Lockhart says rate case "compelling" ahead of last review

WASHINGTON, Dec 2 (Reuters) - U.S. economic data would have to “drastically” alter the nation’s outlook over the next two weeks to change the “compelling” case for an initial hike in interest rates when the Federal Reserve next meets on Dec. 15-16, Atlanta Fed President Dennis Lockhart said on Wednesday.

“My staff and I are getting close to a last review of the overall picture suggested by the data,” Lockhart said of the potentially “historic” Fed session later this month that may approve the first interest rate increase in nearly a decade.

The decision would mark a final end of sorts to the economic crisis and recession that rocked the U.S. economy beginning in 2007, and led the Fed to slash rates to near zero seven years ago.

Given unemployment at five percent, ongoing economic growth, and an expectation that inflation will rise to the Fed’s two percent target, Lockhart said it would take a major negative turn of events to change his opinion that the Fed’s extended stay at the zero lower bound should come to an end.

“Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” Lockhart told a community group in Fort Lauderdale.

This could well be the week when the Fed cements its case for a rate hike. Fed chair Janet Yellen speaks on the economic outlook later on Wednesday before a Washington economics group, and on Thursday to a joint Congressional committee.

The Labor Department’s monthly jobs report on Friday will be a key data point, with economists expecting that as many as 200,000 additional jobs were created in November.

A Reuters poll of over 80 economists taken after the October jobs data were published found a median 70 percent probability the Fed will raise rates on Dec 16. That is up from 55 percent in a poll taken the month before, although Reuters polls have been consistently predicting a December rate rise since the Fed took a pass in September

Reporting by Howard Schneider; Editing by Chizu Nomiyama