In a speech today that reiterates remarks he made last week, Atlanta Federal Reserve President Dennis Lockhart said:
The indicators of economic strength so far in 2012 have been underwhelming. … I expect the recovery process to be slow and drawn out. I think the most reasonable expectation is moderate growth, a slow and possibly halting decline of unemployment, with inflation staying close to the FOMC’s 2 percent target.
Given what we know about the US economic outlook, Lockhart had this to say about the Fed’s accommodative policy and historically low interest rates:
I view this policy stance as appropriate for the outlook I depicted. However, as the employment report of last Friday illustrates, there continues to be a halting and tenuous character to the recovery.
Looking ahead, my viewpoint as regards further policy measures considers two possibilities. Should it become clear that something resembling my baseline scenario of continued, though modest, growth is no longer realistic, further monetary actions to support the recovery will certainly need to be considered.
Lockhart also believes that the US economy “has made substantial progress” to fight off threats to its stability than it was in 2008 and 2009, but that prudence requires the Fed to “acknowledge a degree of fragility” in the economy.