- Dennis Lockhart, Atlanta Fed President
US labour market conditions deteriorated in November, contrasting with the Fed's optimistic outlook given recent solid job gains. The Labor Market Conditions Index declined to 2.9 points, down from 3.9 points recorded in October. The worse than expected data follows the latest positive non-farm payroll report that showed robust job creation in the US. The report resulted in increased bets that the first monetary policy tightening would take place in the year ahead. US policy makers are closely watching the labour market data, as it will be crucial for deciding on a first interest rate increase. The recent positive developments in the US economy underscores the divergence between the monetary policy of the US central bank and its counterparts, which has resulted in the Greenback strengthening and touching multi-year highs versus most of its major peers.
The President of the Atlanta Fed, Dennis Lockhart said central bankers should focus on wage growth, as increasing labour costs will be a sign that the economy reaches full employment. Lockhart believes that muted wage pressures of around 2% a year are an evidence of a "considerable amount" of slack. Lockhart expects the Fed to start policy normalization in the mid-2015, in line with the recent comments from two key policy makers, as well as the market's consensus.
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