Federal Reserve Bank of Atlanta President Dennis Lockhart said the European debt crisis poses the biggest risk to his prediction for a modest U.S. economic expansion and gradual employment growth.
“I currently judge the risks to the U.S. outlook as tilted modestly to the downside,” Lockhart said today in a speech in Hong Kong that repeated remarks by him in Tokyo yesterday. “Chief among them is the potential for broad spillover from Europe to the U.S. and global economy resulting from financial system disruption as well as further economic slowdown.”
Lockhart reiterated his view that policy makers need to retain the option of starting a new round of bond buying to spur the expansion, while saying such a move is unnecessary now. Several Fed policy makers said a loss of momentum in growth or increased risks to their economic outlook could warrant additional action to keep the recovery going, minutes of their April 24-25 meeting showed last week.
The Atlanta Fed president, in response to questions, said yesterday that more easing may be necessary “if there is a severe deterioration in the U.S. economy as evidenced by rising unemployment that is the result of real job loss as opposed to simply rising participation.”
Lockhart, 65, a former Georgetown University professor, has led the Atlanta Fed since 2007. The Atlanta Fed district includes Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee.
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