Atlanta Fed president expects another rate hike before long

The US central bank was right to leave its main policy settings unchanged when it last met, although another tightening move should be expected "before long", the head of its Atlanta branch said.

"However, I did support the consensus view that, before taking the next move, it makes sense to see a little more evidence of progress toward our statutory policy objectives," Dennis Lockhart said in remarks prepared for a speech.

In his opinion, the US economy was still falling short of the Fed's two main policy objectives, full-employment and inflation at 2.0%, "but not by a lot".

"As a policymaker, I take both the current employment picture and recent inflation indicators as encouraging. We're closing in on our objectives. We're nearing our objectives despite a relatively weak pace of growth.

"The reality of a solidly performing labor market suggests that even at 2 percent, the economy has been running above its long-run potential rate of growth."

Of interest, even in the case of the UK, Lacker pointed out that how economic growth was a function of population growth multiplied by productivity.

Hence, his speech largely focused on how to increase the potential rate of growth of the American economy by boosting its endowment of human capital.