rather sharp contrast between u. s. economic prospects and those of much of the rest of the world. the jittery financial markets last week probably can be explained, at least in part, by an interpretation of falling oil prices as reflecting weak global demand, deflation data in europe, and a resulting flight of capital to safety. i ’ m sure the question of the broad economic effects of falling oil prices is on your mind. i am of the view, based on a preliminary assessment by atlanta fed economists, that lower oil prices will be a net benefit to the u. s. economy. i expect a decline in energy - sector new investment and some falloff in employment to be more than offset by a boost to consumer activity. also, the lower cost of oil imports should positively affect the net exports component of the gdp growth calculation. the appreciation of the dollar since last summer will likely affect the export sector, to some extent. my view is that the impact of the dollar ’ s more expensive exchange value and, for that matter, the direct impact of lower oil prices on the energy sector are not severe for the national economy as a whole. but whenever two major world “ prices ” adjust so markedly, unanticipated second - and third - order effects could result. geopolitical event risk connected to the rapid adjustment of these globally high - impact prices cannot be dismissed. analytical humility is a sensible posture. policy outlook these are concerns, not my base - case scenario. as i said earlier, i think the momentum evident in the second half of 2014 will carry over into 2015, and the ongoing outlook will remain solid. if that is indeed the case, i believe the first action to raise interest rates will in all likelihood be justified by the middle of the year. the phrase “ middle of the year ” is admittedly not very precise. that ’ s purposeful on my part. understandably, some financial market participants are fixated on what exact month the first move will occur. perhaps it ’ s easy for me to say, but i don ’ t think the exact timing of liftoff is the most important concern. a couple of years hence, whether the first rate increase came at a particular meeting or another – whether a bit earlier or later than expected – isn ’ t going to make a great deal of difference for the real, main street economy. the key liftoff decision criteria ought to be closely linked to the fomc ’ s two principal policy objectives

dennis lockhart : a potentially momentous year for policy speech by mr dennis lockhart, president and chief executive officer of the federal reserve bank of atlanta, to the rotary club of atlanta, atlanta, georgia, 12 january 2015. * * * key points • atlanta fed president and ceo dennis lockhart, in a january 12 speech at the rotary club of atlanta, reviews the growing strength of the economy, the economic outlook for the year ahead, and the monetary policy outlook. • lockhart stresses that the policy “ liftoff ” decision will be data - dependent. • lockhart expects the annual rate of gdp growth for the second half of the year to be around 4 percent, which is strong growth. • another reason for optimism, says lockhart, is that there was more improvement in labor markets in 2014 than in any other year of the recovery. he thinks the momentum evident in the second half of 2014 will carry over into 2015, and the ongoing outlook will remain solid. • lockhart feels the fed is nearing the end of its job as defined by the extraordinary circumstances of the financial crisis and deep recession. he is looking for a new phase of policy to commence in 2015. as i look back on 2014 and look ahead to 2015, i can comfortably assert that, more and more, the u. s. economy is hitting on all cylinders. the recovery that began in 2009 is welladvanced, and we are getting closer to a point where the fed ’ s federal open market committee ( fomc ), the body that formulates monetary policy, can begin a process of normalizing the interest - rate environment. that process will begin with so - called “ liftoff ” – that is, the first increase in the policy rate. chair yellen, speaking for the committee, has stressed that the liftoff decision will be datadependent. that means we will be closely monitoring evidence of the performance of the economy as the year proceeds, and we will be assessing what the stream of economic data seem to indicate regarding the outlook. so, today i want to present my forecast of how this potentially momentous year is likely to play out. i ’ ll do this in terms of both the vital economic signs and policy. i want to give you a sense of what factors could materially change – even derail – that scenario. and i want to convey a sense of the basis on which important policy decisions ahead will be made. this is my eighth annual address to this club