Just 10 days before the Federal Reserve’s FOMC September meeting, Atlanta Fed President Dennis Lockhart told an audience at a conference in the city that “financial markets seem to be very sensitive to remarks of Fed speakers at the moment.” Hard to argue with that.

Or with anything else Lockhart had to say. He believes there is enough momentum in the U.S. economy to achieve (for the most part) the FOMC’s monetary policy objectives in “an acceptable medium-term time horizon.”

Lockhart also said he expects the second half of 2016 to be stronger than the first half and that he sees full-year growth at “a little below” 2%.

Interestingly he noted that the FOMC continues to make progress toward its full employment mandate and that the majority of evidence suggests that labor market slack is “relatively small.” One wonders what unemployment rate target Lockhart and the FOMC are aiming at. Is it 4.5% or 4.0% or something even lower? But the public is too “sensitive” to Fed pronouncements to be given any, more specific information.

As for inflation, Lockhart thinks that it will trend toward the 2% target once the slack in the labor and product markets drops. Of course that pretty much has to happen at some point. Once everyone who wants a job has one, then wages have to rise and inflation, too, will rise. Lockhart said:

This measure of inflation has been very constant for four years now. It’s been consistently around 1.6 percent and has varied from that reading by only two-tenths or less. By this measure, progress toward the Committee’s inflation objective appears to have stalled. The inflation data overall have not been suggesting disinflation or deflation, but the flat trend line is enough below target that, in my opinion, the shortfall cannot be considered immaterial. I find this to be an awkward state of affairs. … At times during this year, we detected hints of accelerating inflation, but I have to say the evidence is not overwhelmingly convincing. I am still relying on “reasonable confidence” to a greater extent than evidence in hand.

Lockhart is not a voting member of the FOMC this year. The full text of his speech is at the Atlanta Fed’s website.

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