- Jeffrey Lacker, Richmond Fed President
The heads of two regional Federal Reserve banks backed an interest rate increase ahead of the Fed's March meeting as an strengthening economy added to sentiment to tighten monetary policy. The heads of the Richmond and Kansas City Fed supported a quarter point lift in the main lending rates for banks "in light of continued improvements in labour market conditions and expectations that inflation would rise," according to minutes of the Fed's March meeting. Recent signs that US inflation is accelerating lay the groundwork for the US central bank to hike interest rates, Richmond Fed President Jeffrey Lacker said. The Fed should proceed with its earlier plan to raise interest rates four times this year. The Richmond Fed president said the Fed has often reacted to financial market developments that turned out, with hindsight "to be false signals." Lacker added that the negative financial market developments that led the Fed to pause in March have largely reversed. Lacker is a non-voting member of the FOMC this year. He is seen as one of the more hawkish Fed officials, having pressed the US central bank to hike interest rates last fall.
Minutes of the last Fed policy meeting showed a growing divergence in views over when to hike rates next. Though an increase is considered unlikely when the Fed meets this month, steady improvement in the job market and strengthening growth could set the stage for a hike in June.
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