Aug. 3 (Bloomberg) -- Federal Reserve Bank of Richmond President Jeffrey Lacker said he opposed the Fed’s decision to keep the main interest rate near zero through at least late 2014 because such accommodation probably won’t be necessary.
“Exceptionally low federal funds rates are not likely to be warranted for this length of time,” Lacker said in a statement today. “The Committee’s statement implies more confidence about the persistence of low interest rates than I believe is justified by the current outlook.”
Lacker dissented on Aug. 1 for a fifth consecutive Federal Open Market Committee meeting after policy makers left unchanged a plan to hold the benchmark Fed funds rate at a record low. He released his statement before the Labor Department said payrolls in the U.S. rose 163,000, more than forecast, while the jobless rate unexpectedly increased to a five-month high of 8.3 percent.
“Significant uncertainty regarding the evolution of economic conditions over the next few years makes the future path of interest rates difficult to forecast,” Lacker said.
Equity futures and U.S. government bond yields extended gains after the jobs report. Standard & Poor’s 500 Index contracts expiring in September rallied 1.2 percent to 1,377.80 as of 8:40 a.m. in New York. The 10-year yield rose seven basis points, or 0.07 percentage point, to 1.55 percent.
The FOMC said on Aug. 1 it will pump fresh stimulus if necessary into the weakening economic expansion to boost growth and reduce an unemployment rate that’s been stuck at 8 percent or higher for more than three years.
The central bank also said it will continue swapping $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings, an action dubbed Operation Twist.