Dennis Lockhart was the president of the Federal Reserve Bank of Atlanta during the decade that encompassed the fall into the Great Financial Crisis and the long haul to get out of it. He worked alongside Ben Bernanke, Janet Yellen, and Jay Powell. Like other former Fed officials he has a keen sense of the internal dynamics of Fed policymaking and how it guides decision making.
Now, as President Trump introduces potentially game-changing policies from tariffs to deportations, Dennis sees the Fed in wait-and-see mode now in January. Looking ahead, “I see the March meeting…as shaping up to be an interesting meeting,” he says “You just don’t know yet.”
He notes that the Trump tariff policy is likely to be implemented in February “or at least that’s the latest indication. So what is it going to look like in March where you already have some seen some substantial price increases?”
I was especially struck by Dennis’s answer when I ask him to set the stage for the Fed’s meeting this week, what we can expect from the first policy decision of the year he gives me a much bigger answer than will they cut the key rate or pause at this meeting.
From recalibration to another new phase 00:00:52:17 - 00:02:39:24
The January meeting, being the first meeting of the year, I think, is going to be part of a new phase. I see quite a difference in terms of the thought process of the committee around policymaking in 2024 versus 2025. In 2024, starting in September, they dubbed it recalibration, and I think the reason for that was that policy had been set at a very high and restricted restrictive level, notwithstanding substantial improvement in the inflation numbers. So when they got around to it in September and they could possibly have moved in July, they felt that they were adjusting policy for the reality of the economic data coming in and that that was a process that they don't need to do all at one time. So, they recalibrated over three meetings with 100 basis points total. But I think it's very clear that was the end of a particular chapter. And 2025 is likely to be a new chapter. And in 2025, they now have policies starting at a more reasonable point, and they're going to be making their decisions based upon how a rather good economy evolves over 2025.
A care-taker mindset in 2025? 00:02:40:01 - 00:02:59:23
And I think their mindset is one in which they don't have any major adjustment to make. They simply have to set policy to preserve a well-performing economy. And at the same time continue to pursue particularly their inflation objective.
Has inflation progress stalled? 00:05:10:06 - 00:05:51:14
Inflation has some people… there are a lot of people… in the stalled-out camp. It's not really coming down like it was or it's gradually coming down. So, what's the bigger risk? If you're at the Fed and you're sitting there saying, “what should we do? Should we do a kind of this meeting or should we just wait and see?” Is there such a big risk that if you don't cut, that's, you know, the economy's going to slow down? Or is there a bigger risk that you keep cutting, inflation's going to continue to pick up? Well, there's no real indication that the economy is going to slow down. I think they're in a wait and see mode for this meeting.
Meetings on tap…as policy reveals itself 00:05:51:16 - 00:06:26:17
I see the March meeting is set as shaping up to be an interesting meeting. You just don't know yet. Even though we're at the end of January what the world's going to look like in March, because the tariff policy, for example, is being is likely to be implemented in February, or at least that's the latest indication. So what is it going to look like in March, where you already have seen some substantial price increases? And will they precipitate some kind of immediate reprisal from trading partners? All of this is an unknown at this point at the end of January. So I see the March meeting as one in which they may continue to wait and see, just to see how some of the fiscal side or administration policies play out. But they could be satisfied with what they're seeing in the inflation numbers enough to make another cut.
Committee is no longer of one mind on policy 00:09:43:09 - 00:10:14:17
So this is not a tight committee, right. In September, I think the committee was, you know, pretty unified. This committee has a variety of views working. And so as we go into this coming meeting, I suspect the you know, the chair may have to use the weight of his office to state a preference. And then usually everyone goes along with that.
Deportations and Policy 00:17:17:15 - 00:18:19:12
Deportations? Well, I think the economic concern around mass deportation is employment in certain critical industries, namely construction, agriculture, leisure and hospitality, home care, three or four others where the undocumented tend to be employed. So the one I think is really one important one to follow is is going to be, well, construction and agriculture, particularly because that, you know, we're trying to alleviate a shortage of housing in the United States.
The Lockhart wrap 00:26:09:02 - 00:26:34:24
I think the economy is really on balance quite solid, quite strong. And so the job of the Fed is to preserve a good thing. It's not to correct a lot. They would like to correct the inflation rate down a bit, but I mean, in the greater scheme of things, mostly it's a good picture and they need to protect that.
We covered a lot of ground, from the notable division of views between hawks and doves on the FOMC, to how hard it will be on the agricultural industry. Sit back now and get even better prepared for the Fed’s policy decision.
© Federal Reserve Bank of Atlanta
Dennis P. Lockhart
President, Federal Reserve Bank of Atlanta, 2007–2017
Dennis P. Lockhart became the fourteenth president and chief executive officer of the Federal Reserve Bank of Atlanta on March 1, 2007. He retired on February 28, 2017.
Lockhart was born in Bakersfield, California. He attended Stanford University and earned a bachelor’s degree in political science and economics in 1968. In 1971, he earned a master’s degree in international economics and American foreign policy from the Johns Hopkins University School of Advanced International Studies. He also attended the Senior Executive Program at MIT’s Sloan School of Management in 1994. He served as an officer in the US Marine Corps Reserve from 1968 to 1974.
Lockhart started his career with Citicorp/Citibank (now Citigroup). From 1971 to 1978, he held various international positions in Saudi Arabia, Greece, and Iran. From 1978 to 1986, he was senior corporate officer of the Southeast office of Citibank in Atlanta. From 1987 to 1988, Lockhart was head of the firm's Latin American debt-to-equity swap investment program, designed to restructure sovereign debt.
From 1988 to 2001, Lockhart worked at Heller Financial, where he served as president of Heller International Group, which had activities in commercial banking, finance and merchant banking in North and South America, Europe and Asia. From 2001 to 2003, he was managing partner at Zephyr Management LP, a private equity firm based in New York with activity in Africa and Latin America.From 2003 to 2007, Lockhart served on the faculty of Georgetown University's Walsh School of Foreign Service, teaching in the master's program. In this role, he was chairman of the program's concentrations in international business-government relations and global commerce and finance. He also was an adjunct professor at Johns Hopkins University's Nitze School of Advanced International Studies.
Before joining the Atlanta Fed, Lockhart served as a member of the boards of directors of several companies, including CapitalSource Inc., Tri-Valley Corp., and Greenfield Holdings Credit Ltd. He was also chairman of the Small Enterprise Assistance Funds. He served on the Advisory Committee of the US Export-Import Bank and chaired the committee in 2000.
Currently, Lockhart serves on the board of directors of the Metro Atlanta Chamber of Commerce and St. Joseph's Health System. He is a trustee of Agnes Scott College and the Atlanta International School. He also chairs the World Affairs Council of Atlanta and the Midtown Alliance.
During Lockhart’s tenure, the Federal Reserve faced some of the most traumatic economic events since the Great Depression of the 1930s, including the financial crisis and Great Recession. Lockhart has given many speeches on the financial crisis, monetary policy, and the economy.
Under Lockhart’s stewardship, the Atlanta Fed has won several awards. It was voted one of America’s Top Workplaces by Workplace Dynamics in 2013. In 2012 the Atlanta Journal-Constitution ranked the Atlanta Fed number nine in the large-company category as one of the top workplaces in Atlanta.
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