Lockhart says QE taper possible at next three meetings

‘Full Phase-Out’

“I don’t expect to have enough data to be sure of my outlook” in September, he said. “For that reason, I don’t think a decision that commits the Fed to a full phase-out of asset purchases and lays out a precise, beginning-to-end path for doing so would be advisable.”

Payrolls rose by 162,000 workers in July, the fewest in four months, following a revised 188,000 increase in June, data showed Aug. 2. The jobless rate dropped to a more than four-year low of 7.4% from 7.6%.

Lockhart said he expects a pickup in U.S. economic growth in the second half of the year and a further acceleration next year.

“I expect consumer activity to strengthen, I expect business investment to accelerate somewhat, and I expect the rebound we have seen in the housing sector to continue,” he said. “I expect the recent improvement in exports to last. And I expect to see an easing of the public-sector spending drag at the federal, state, and local levels.”

‘Confidence Shock’

Still, another “fiscal confidence shock” is possible in the second half of the year as Congress debates federal spending levels, he said.

Fed Chairman Ben S. Bernanke, at a June press conference, said the Fed may start dialing down its unprecedented bond- buying program this year and end it in mid-2014 if the economy achieves the sustainable growth the Fed has sought since the recession ended in 2009.

The Fed has pledged to keep the main interest rate near zero so long as the unemployment rate remains above 6.5% and the forecast for inflation doesn’t exceed 2.5% over one to two years.

A former Georgetown University professor, Lockhart, 66, has led the Atlanta Fed since 2007. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.

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