Fed's Lockhart Non-Committal On Rate Hike In September

First out of the gate among the Fed speakers today (before they go dark) is Dennis Lockhart (non-voter) commenting positively on the economy and jobs, shrugging off the recently terrible ISM data stating "I believe the economy is sustaining sufficient momentum to substantially achieve the committee's monetary policy objectives in an acceptable medium-term time horizon," but questioned inflation still running below mandate.

• LOCKHART: `PUZZLING' TIGHTER LABOR MKT NOT YET LED TO INFLATION
• LOCKHART: DOESN'T CONSIDER ANY ASSET MKT IN BUBBLE TERRITORY
• FED'S LOCKHART SAYS WE'RE MONITORING COMMERCIAL REAL ESTATE
• FED'S LOCKHART: COMMERCIAL REAL ESTATE VALUES EXTREMELY ROBUST
• LOCKHART SAYS PROSPECTS FOR NEGATIVE RATES IN U.S. VERY REMOTE

Lockhart is one of three Fed speakers Monday before the committee heads into the quiet period leading up to the meeting. Minneapolis Fed President Neel Kashkari, who is not a voter this year, will speak at 1 p.m. ET in St. Paul, Minnesota and Fed Governor Lael Brainard, who is a voter, will speak at 1:15 p.m. ET in Chicago.
*) As MNI details; "Notwithstanding a few recent weak monthly reports, from the Institute for Supply Management, for example, I am satisfied at this point that conditions warrant that serious discussion," Lockhart said in a speech prepared for the National Association for Business Economics. "I believe the economy is sustaining sufficient momentum to substantially achieve the committee's monetary policy objectives in an acceptable medium-term time horizon," continued Lockhart, who doesn't vote on the committee until 2018, but is largely seen as a centrist on the committee. Lockhart's views in this speech are largely in line with interviews he gave late last month on the sidelines of the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming. He described the economy Monday as "expanding at a moderate pace fueled mostly by growth of consumer activity." Business investment spending "remains subdued," he added, though "jobs growth remains on a positive trend."
*) Lockhart, like many of his FOMC colleagues expects a slowdown as the economy approaches full employment, but just when that slowdown is expected is up for debate.For nbow rate hike odds in September remain below pre-Brexit levels...

We see Fischer, George, Mester, and Rosengren as 'likely' to push for a rate hike; Yellen, Dudley, and Bullard on the fence; Tarullo and Brainard are unlikely to push for a rate hike and Powell's view is unknown. But Lockhart went on to note...

*) "The 12-month trend in payroll jobs growth has slowed a bit from its peak in the beginning of 2015," he said, "and I think it's reasonable to expect some further slowing in jobs growth as the economy approaches full employment." He said the August number of 151,000 job gains was "comfortably above the various estimates of 'break even,' the number needed to hold the unemployment rates constant. Underlying inflation continues to run about 0.5% points below target," he said, though "Wage pressures are accelerating and broadening out as we approach full employment." Given this progress on the Fed's dually mandated goals, Lockhart said he will head into the next few FOMC meetings asking "what is the right policy setting given an outlook of getting to full employment and price stability relatively soon, in the next couple of years? If 1.6% inflation and 4.9% unemployment were all you knew about the economy, would you consider a policy setting one tick above the zero lower bound still appropriate?" He concludes by saying "I think circumstances call for a lively discussion next week."

*) Looks like the perfect time for a rate hike...