June rate hike by Federal Reserve is a real possibility: Dennis Lockhart

NEW YORK: Federal Reserve Bank of Atlanta president Dennis Lockhart said US financial markets may be underestimating the odds of a rate increase in June.

“I would put more probability on it being a real option,” Lockhart told reporters at the Atlanta Fed’s financial markets conference at Amelia Island, Florida, when asked about federal funds futures markets indicating odds of a hike at about 10 percent.

“The communication of committee participants and members between now and mid-June obviously should try to prepare the markets for at least a realistic range of possibilities” for the next policy meeting.

Lockhart said he supported the Federal Open Market Committee’s decision not to specify to what degree global developments pose risks, compared with a statement prior to its hike at the December meeting that risks to the outlook were “nearly balanced.”

Investors halved the odds of a June rate increase last week as the central bank signaled little explicit urgency to tighten. “It is desirable that financial markets and policy makers be reasonably well aligned,” said Lockhart, a non-voting member of the FOMC this year.