Upside risks to inflation have increased noticeably, Fed´s Lacker says

Upside risks to inflation had recently increased "noticeably", which was something that needed to be taken into account, one of the US Federal Reserve´s more hawkish policy-makers said.

Speaking at a central banking conference in Paris, on Monday, the president of the Federal Reserve bank of Richmond, Jeffrey Lacker, reportedly said that upside risks to price stability had increased, perhaps "not significantly" but "I think noticeably and I think materially".

"We need to take that into consideration," he added.

Lacker, who was not a voting member of the US Federal Open Market Committee in 2016, said he expected the 'core' rate of inflation to rise this year versus 2015 and to approach 2.0% in 2017.

He also dismissed worries about the recent retreat in market-based measures of inflation compensation, although he admitted that recent declines gave him some pause.

On 20 March, analysts at Goldman Sachs were even more forceful in their views, telling clients that "if we are right about data, the Fed could quickly reverse course, in line with our US team’s call".

Goldman Sachs economists stuck by their forecast for three interest rate hikes by the US Fed in 2016, arguing - among other things - that it made no sense for the US central bank to bolster growth via a more dovish stance, which in its opinion would only drive further 'divergence' between rates in the States and other G-10 economies.

According to the broker their 'first commandment' for FX in 2016 still held true.

"Following the large rise of the Dollar in H2 2014 – the growth and inflation picture looks robust, which means that underlying momentum in the US is stronger than it appears."