Fed's Lockhart says markets misheard Bernanke

Fed's Lockhart says markets misheard Bernanke

Financial markets appear to have misunderstood Fed Chairman Ben Bernanke's framework for slowing down asset purchases, said Dennis Lockhart, the president of the Atlanta Fed Bank on Thursday. "I don't want to be too cute about a serious matter, but to make an analogy, it seems to me [Bernanke] said we'll use the patch, and use it flexibly, and some in the markets reacted as if he said 'cold turkey'," Lockhart said in a speech to the Kiwanis Club in Marietta, Ga. Lockhart said he would be watching to see if there were any negative spillovers from the back up in long-term rates and the drop in equity prices into the real economy. Lockhart is not a voting member of the Fed's policy-setting committee this year but his views are seen as often close to the committee's consensus. Lockhart said he expects growth and inflation to pick up and unemployment to decline steadily, at a modest pace. If the economy evolves in this way, "I think the position that the economy does not need quite as much stimulus is fully supportable," he said.