Brexit could 'loom large' over June policy meeting - Fed's Lockhart | Reuters

JACKSONVILLE, Fla. Atlanta Federal Reserve President Dennis Lockhart said on Tuesday that Britain's vote on whether to stay in the European Union could "loom large" as the U.S. central bank contemplates whether to raise interest rates at its next policy meeting.

"Brexit could be a source of heightened global uncertainty," Lockhart said in prepared remarks before the World Affairs Council of Jacksonville, Florida, adding it "has some potential to loom large as we approach the June meeting."

Earlier in the day, Lockhart also flagged risks to the U.S. economy posed by Britain's referendum on European Union membership, which takes place a week after the Fed next meets on June 14-15.

Fed policymakers in March forecast two rate rises this year but there was little sign in their latest policy statement last week of any hurry to raise rates again amid slowing global growth and tepid inflation at home. The Fed raised interest rates for the first time in nearly a decade in December.

Lockhart said that he is also worried that lacklustre U.S. first-quarter gross domestic product growth "turns out, in fact, to be persistent" and that he is currently ambivalent on whether the U.S. central bank should raise rates in June.

The U.S. economy has been sending mixed signals since the start of the year, he noted, with solid consumer fundamentals not showing through in robust growth in domestic demand and wage growth still tepid.

That said, Lockhart added that for the time being he favoured strong jobs gains over the growth data as the more reliable signal of the health of the U.S. economy.

Investors currently see the Fed raising rates again in December and little chance of a June hike, according to an analysis of Fed Fund futures by the CME Group.

Separate manufacturing data from China and Britain on Tuesday rekindled fears over the pace of the global slowdown, sending U.S. stocks lower.

(Reporting by Lindsay Dunsmuir; Editing by Diane Craft)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: May 04, 2016 05:15 AM

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