PrefBlog

There’s some sabre rattling from the Fed:

Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank needs to be ready to raise interest rates even if joblessness exceeds 7 percent.

Speaking in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link, he said the Fed will probably have to raise rates in mid-2013. Adding more monetary stimulus now would raise inflation risks without doing much to boost growth, he said.

Unemployment “could well be above 7 percent, and I think we have to prepare for that,” Lacker said. “I think it’s a misconception to think we have to get unemployment all the way down to five or some number like that before we raise rates.”

Lacker has cast the only dissenting vote at each of the Federal Open Market Committee’s policy meetings this year. He has opposed the Fed’s statement that economic conditions will probably warrant “exceptionally low” levels of the federal funds rate at least through late-2014.

It was a strong day for the Canadian preferred share market, with PerpetualPremiums up 23bp, FixedResets gaining 8bp and DeemedRetractibles winning 39bp. The Performance Highlights table is comprised entirely of winners, with a preponderance of insurance DeemedRetractibles. Volume was high.

This entry was posted on Wednesday, May 2nd, 2012 at 10:31 am and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.