Fed's Lockhart Sees High Threshold for New Bond Buying

Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. economy would need to deteriorate further to warrant additional asset purchases, or so-called quantitative easing, by the Fed.

“The bar for initiating another round of quantitative easing should remain high,” Lockhart said today in response to questions after a speech in Hong Kong. In order to support more bond buying, “I would have to see a serious deterioration of the economy,” such as “real layoffs, real job destruction” or the threat of falling prices, he said.

Several Fed policy makers said a loss of momentum in growth or increased risks to their economic outlook could prompt additional action to spur the recovery, minutes of their April 24-25 meeting showed last week.

The U.S. jobless rate will probably fall slightly below 8 percent by the end of this year, Lockhart said.

The economy confronts headwinds including household deleveraging and a “major drag” from housing on “consumer thinking,” he said.

To contact the reporters on this story: Fion Li in Hong Kong at fli59@bloomberg.net Steve Matthews in Atlanta at smatthews@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net