-Jeffrey Lacker, President of Federal Reserve Bank of Richmond
Janet Yellen, Fed Chairwoman, has found herself in a difficult situation, as a gap in views on a timing of the first interest rate hike in almost a decade continues to widen. The US central bank has been divided into two parts, with some policy makers insisting on lift-off in the federal funds rate already in June, while others believe the Fed should keep rates near zero until the second half of next year. This divergence in opinions makes it difficult for Yellen to navigate the monetary policy in the world's number one economy. One of the sticklers for a rate hike this summer is Federal Reserve Bank of Richmond President Jeffrey Lacker, who said last week that there is still a strong case for the US central bank to begin raising interest rates in June, as the recent soft economic data will probably prove temporary. At the same time, the President of the Minneapolis Fed Narayana Kocherlakota argued that the Fed should maintain rate on hold until the middle of next year to help the US economy fully recover from the Great Recession.
In March, the FOMC dropped a pledge to be "patient" as it considered the first rate hike since 2006, while Fed Chair Janet Yellen said borrowing costs would probably be increased gradually. Among market participants, expectations for the first increase have been pushed back. A majority of economists forecast the first rate rise at the Fed's September meeting.
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