Photographer: Andrew Harrer/Bloomberg

Fed Officials Leave Door Open to June Hike If Justified by Data

  • Four regional Fed presidents speak about outlook for economy
  • June FOMC still a `live' meeting for move if economy on track

Four regional Federal Reserve presidents said they were open to considering an interest-rate increase in June, speaking on the eve of a monthly U.S. jobs report that could indicate whether the economy can handle a hike.

St. Louis Fed chief James Bullard, San Francisco’s John Williams, Robert Kaplan of Dallas and Atlanta’s Dennis Lockhart all stressed in separate remarks Thursday that policy would be data dependent and the June 14-15 meeting of the Federal Open Market Committee was on the table. All four take part in a panel debate at Stanford University later in the day.

QuickTake The Fed Lifts Off

“My attitude about June is that it’s a live meeting, in which we will have plenty of new data compared to March,” Bullard, a FOMC voter this year, told reporters in Santa Barbara. “Our options are open at this point.”

Policy makers must decide if the economy warrants another hike or whether they should delay action again while they wait to see if weaker growth abroad will undermine their outlook for U.S. jobs and inflation. Investors see only a 10 percent chance they’ll move in June.

The FOMC last week held its target range for the benchmark policy rate unchanged at 0.25 percent to 0.5 percent, standing pat for a third consecutive meeting after raising rates in December for the first time in nine years.

‘Closely Monitor’

Officials also omitted a direct reference to the risks posed by slower growth abroad in a statement explaining their decision, though they cautioned that they continue to “closely monitor” global developments.

Kaplan said he’d be looking for continued progress on the Fed’s dual mandate for price stability and full employment to support hiking next month.

“I just want to see continued progress,” he told Kathleen Hays in an interview on Bloomberg Radio. “What I don’t want to see is deterioration in either of those measures. That would give me pause.”

Data to be released Friday by the U.S. Labor Department is expected to show that employers added 200,000 new workers to non-farm payrolls in April, according to analysts surveyed by Bloomberg, with the jobless rate edging down a tenth of a percentage point to 4.9 percent, or close to Fed estimates of full employment.

Lockhart, in an interview on CNBC television, said “a continuation of solid reports is very important” and described 200,000 as a threshold which he’d like to see surpassed. He also said he was “very much at the moment on the fence” about a June rate increase.

The Fed’s job has been complicated by a first-quarter slowdown in U.S. growth, to 0.5 percent at an annual pace, with the outlook for a second quarter rebound has been dimmed by subdued readings on the economy, though the labor market has strengthened.

Officials next month will update their estimates for the economy and the pace of rate increases. In March they predicted two hikes in 2016.

San Francisco Fed President John Williams told CNBC television that the underlying tone of the economy was healthier than the first quarter GDP numbers suggest and that the two to three rate increases predicted by officials in March is a “reasonable view, but we’ll be watching the data.”