Monday, July 20, 2009

[Updated] Atlanta Fed Chief speaks in Nashville

[Updated 1:39 p.m. CDST] Dennis Lockhart (left), president and CEO of the FRB of Atlanta, spoke today to Nashville Rotarians. In a transcript provided by the Fed, Lockhart summarized his message -- reflecting his sense that even as growth resumes there will be no "sharp rebound" from this economy --as follows: "The economy is stabilizing and recovery will begin in the second half. The recovery will be weak compared with historic recoveries from recession. The recovery will be weak because the economy must make structural adjustments before the healthiest possible rate of growth can be achieved. While this adjustment process is going on in the medium term, I believe inflation and deflation are roughly equal risks and require careful monitoring. Slack in the economy will suppress inflation. And inflation is unlikely to result—by direct causation—from the recent growth of the Fed's balance sheet. In any event, the Fed has a number of tools being readied to unwind the policies used to fight the recession, and it will be some time before their use is appropriate." In a speech a month ago to security-industry professionals, Lockhart touched on global imbalances, consumer sentiment, the troubling condition of the U.S. commercial-real estate sector, and more. The Nashville Branch of the Atlanta Fed has an advisory board led by Rich Ford, which provides Beige Book input for the Fed, as reported in this VNC story.

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