Federal Reserve forecasts pointing to four interest rate hikes in 2016 show what the U.S. central bank means when it says it anticipates raising rates at a "gradual pace," Richmond Fed President Jeffrey Lacker said on Friday.
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"That's half the rate at which we raised rates in the last tightening cycle. So that's what 'gradual' means to me," Lacker told reporters in Charlotte, North Carolina after participating in a business panel discussion.
The Fed raised the range of its benchmark interest rate by a quarter of a percentage point on Wednesday and indicated that further hikes would be gradual. The central bank also said its median policymaker forecast expected the equivalent of four quarter-point hikes next year.
Lacker said he had been in favor of raising rates this past June and was confident inflation would rise "noticeably" toward the Fed's 2 percent medium-term target in 2016 if oil prices and the value of the U.S. dollar stabilized.
"I hope we're not behind the curve," Lacker, who will not have a vote in Fed policy decisions in 2016, said in reference to the central bank's monetary policy.
In its policy statement on Wednesday the Fed said it would probably not begin trimming its massive holdings of bonds until rate increases were "well under way," but Lacker said on Friday he favors reducing the balance sheet "as soon as possible."
(Reporting by Jason Lange in Charlotte, North Carolina; Editing by Paul Simao)