Growth Diminishes Need for Easing: Fed's Lacker

A top Federal Reserve official on Friday said it would be difficult to argue for more monetary policy easing if U.S. economic growth is between 2 and 3 percent this year, as he predicts.

"If we get growth about what I'm expecting, about what a lot of people are expecting ... I don't see where the rationale for further easing is going to come from," Richmond Fed President Jeffrey Lacker said on CNBC television, adding the country could see 3 percent growth in 2013.  In January, the U.S. central bank forecast GDP growth of 2.2 to 2.7 percent for this year, down from a previous forecast of 2.5 to 2.9 percent. For 2013, it forecast growth of 2.8 to 3.2 percent.

Lacker, the lone dissenter from Fed's last two policy statements, said there is a "good chance" the unemployment rate will fall from 8.3 percent currently to below 8 percent by next year. Lacker added that he was cautious about the improving labor market. "You have to keep in mind the possibility that things could slow down a bit, but I've been heartened by the recent numbers."

Philadelphia Fed President Charles Plosser, who like Lacker is known as a policy hawk, expects the jobless rate to fall below 8 percent this year. He told Nightly Business Report it will take another two to three years for the rate to dip below 6 percent.  "It may be 6 percent is the new full employment rate going forward, but that may take another couple of years," said Plosser, according to a transcript of the interview.

Lacker, turning to inflation, said the country is in "reasonably good shape" despite the rise in oil prices.