For economists, like comedians, timing is everything.
So it was for Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, pushing for higher interest rates during a speech this morning to the Retail Merchants Association of Richmond.
“Overall, I believe the evidence that labor market conditions no longer warrant continuation of exceptionally low interest rates,” he told a packed breakfast crowd at the Richmond Westin Hotel.
Minutes later, he was handed a piece of paper reporting the latest U.S. Labor Department data for unemployment. It showed that employers added 173,000 workers in August and the national unemployment rate dropped slightly to 5.1 percent. The report is the best since the 2008 recession and seemed to underline Lacker’s speech.
“It’s a pretty good report,” he said, “pretty much right down the middle of the fairway.”
Lacker sits on the Federal Reserve System’s Federal Open Markets Committee, which helps set interest rates. He’s regarded as an inflation hawk who believes that tighter money makes for a healthier economy and has repeatedly pushed for the Fed to raise rates.
To help a sputtering recovery, the Fed hasn’t hiked rates since the great recession began seven years ago. In early 2012, the Fed gave an inflation rate goal of 2 percent.
Lacker says that goal has been passed, making it more necessary to raise rates now rather than wait till inflation gets out of hand as it did from the 1960s to the early ’80s.
He dismissed recent turmoil in China’s economy because the “economic fundamentals “of the U.S. economy will limit the financial threat from Asia.” He also says the open markets committee may raise rates when it meets in about 10 days, but that any hike won’t surpass a quarter of a point.
Whether his bullish economic predictions made an impression on the audience was uncertain. When Richmond merchants in the room were asked for a show of hands on whether this year’s holiday sales would be better than last season’s goal, few hands were raised.