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Fed’s Lockhart Says Weak Jobs Report Doesn’t Require More QE

April 11, 2012

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta. Photographer: Andrew Harrer/Bloomberg

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta. Photographer: Andrew Harrer/Bloomberg

Federal Reserve Bank of Atlanta President Dennis Lockhart said while the jobs report for March was disappointing, it doesn’t alter his view that the U.S. economy is growing moderately, and he would be “reticent” to support additional asset purchases, or quantitative easing.

“I am still not convinced that another round in this time frame would achieve a great deal,” Lockhart told reporters in Stone Mountain, Georgia, today. “I view it as a policy that would respond more to a fairly dramatic negative change of direction of the economy that could be evidenced by rising unemployment, evidenced by plummeting growth.”

Fed policy makers are holding off on increasing monetary accommodation unless the economic expansion falters or prices rise at a rate slower than its 2 percent target, according to minutes of their March 13 meeting released last week. The central bank also affirmed its projection, first announced in January, that subdued inflation and economic slack will probably warrant exceptionally low rates through late 2014.

Lockhart said one weak jobs report isn’t enough to change his view on the U.S. economy. The Labor Department said April 6 that employers added 120,000 jobs in March, half as many as in February. It was the fewest jobs added in five months. Unemployment fell to 8.2 percent from 8.3 percent as discouraged workers left the labor force. The gain in payrolls was less than the most pessimistic estimate in a Bloomberg News survey of economists.

Jobs Number

“I would have preferred to see double” the number of jobs, Lockhart said. “It was in that sense disappointing.” Still, “it was one month’s number. It could very well have been affected by weather. The number is subject to revision. We don’t know yet whether there will be revisions down the road.”

“So I think it is way too early to conclude the economy is sputtering and that the employment progress we have made is stalling out,” he said.

Lockhart, speaking with reporters at the Atlanta Fed conference at Stone Mountain, also said that “sterilized” quantitative easing, or asset purchases designed to reduce possible inflation risks, remains an option.

“I think it is one of our options,” he said. “It is obviously very similar to Operation Twist in the sense it doesn’t add to the balance sheet and it puts pressure on long- term rates.” Operation Twist refers to a program to buy long- term Treasuries and sell short-term securities.

“So it is clearly an option, but I really have not been presented with any detailed analysis” of such a plan, he said.

Lockhart said the U.S. economy may grow 2.5 percent to 3 percent this year, and inflation will stay near the Fed’s target of 2 percent with inflation expectations “relatively stable.”

Lockhart, 65, a former Georgetown University professor, has led the Atlanta Fed since 2007. Fed presidents rotate voting on monetary policy, with Lockhart voting this year. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.

To contact the reporter on this story: Steve Matthews in Atlanta at

To contact the editor responsible for this story: Kevin Costelloe at

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