By Vicki Needham - 07/12/10 07:30 PM EDT
“For me, the consideration of further easing is very far away,” Lacker said. “It would take a very substantial, unanticipated adverse shock” for the Fed to take additional steps.
As the nation recovers from the financial crisis and recession, Lacker said the stock market has overreacted to economic news that has fallen below forecasts.
“I think what’s been happening is some market participants are overreacting to a couple of reports that have been a little bit below what people expected,” he said today during the opening of a new exhibit in Richmond on the Fed’s history. “We had some reports better than expected a couple of months ago. I think this is going to be a recovery that’s like that over time.”
Although inflation has remained stable, prices are likely to increase into the 1.5 to 2 percent range by the end of the year, minimizing the chances of deflation, Lacker said.