€d_artsel schreef op 26 september 2012 20:23:
Fed manneke nr 2 zonder stemrecht met een wel andere visie dan die van de Phil Fed.van gisteren.
The Federal Reserve should take additional steps to further strengthen its positive effects on the economy, a central bank official said Wednesday, mounting a strong defense of the Fed's latest bond-buying program.
"This was the time to act. With the problems we face and the potential dangers lying ahead, it is essential to do as much as we can now to bolster the resiliency and vibrancy of the economy," said Federal Reserve Bank of Chicago President Charles Evans.
Mr. Evans was addressing the Lakeshore Chamber of Commerce Business Expo in Hammond, Ind. He isn't a voting member of the monetary-policy-setting Federal Open Market Committee this year.
The FOMC decided earlier this month to launch an open-ended program to buy $40 billion of additional mortgage-backed securities each month and also extended its guidance to keep short-term interest rates low until mid-2015, a revision from the previously announced late 2014.
"I strongly supported the Committee's policy actions," Mr. Evans said, noting more easing measures from the central bank will lead to a stronger U.S. economy.
"I believe we should adopt an explicit state-contingent policy rule that commits the Fed to providing accommodation at least as long as the unemployment rate remains above 7% and the outlook for inflation over the medium term is under 3%," he said. "If our progress toward this unemployment marker falters, then we should expand our balance sheet to increase the degree of monetary support."
Mr. Evans's comments were in sharp contrast to those of Federal Reserve Bank of Philadelphia President Charles Plosser, who Tuesday said the Fed's new bond-buying program is unlikely to boost economic growth and could eventually lead to inflation.
Mr. Evans, in his speech Wednesday, pointed out that those who oppose the Fed's easing argue that monetary-policy accommodation may lead to unintended consequences. "Being timid and unduly passive can also lead to unintended consequences," Mr. Evans said.
"If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s," the official said. "Underestimating the enormity of our problems and the negative forces holding back growth itself exposes the economy to other potentially more serious unintended consequences. That type of passivity is a gamble that is not worth taking."
A stronger economy would be more resilient to a large-scale decline in global growth, whereas risky events such as fiscal problems could throw the U.S. back into recession, he said.
The current recovery has been disappointing and more accommodative policies "have the power to reverse these setbacks and raise employment, output and incomes," Mr. Evans said.
He said he disagreed with the dismal view of the economy some people hold as well as with the idea that monetary policy isn't powerful enough to generate a robust expansion.
"I refuse to be so nihilistic in the absence of strong evidence of permanent disruptions," Mr. Evans said. "It is very hard to believe that millions of people who were working productively just a few years ago have suddenly become unemployable."
Also, core inflation, the growth of which some have voiced concerns about, has been under 2% since the end of 2008, he said.
That said, there are several headwinds on the horizon, including a slowing global economy, the problems in the euro zone and the U.S.'s so-called fiscal cliff, the official said.
Under these circumstances, "we cannot be complacent and assume that the economy is not being damaged if no action is taken," Mr. Evans said. "I am optimistic that we can achieve better outcomes through more monetary policy accommodation."