Federal Reserve Bank of Cleveland President Sandra Pianalto said the central bank’s highly accommodative monetary policy is appropriate.
“Our policy is appropriate in this economic environment; it is supporting a stronger recovery while ensuring that inflation remains consistent with our mandate,” Pianalto said today in prepared remarks in Lexington, Kentucky.
“Our highly accommodative policy is designed to help lower interest rates for consumers and businesses to encourage new borrowing, to help facilitate the refinancing of loans, and to reduce the interest costs associated with variable-rate loans,” the Cleveland Fed chief told the Rotary Club of Lexington, Kentucky. “‘It is an important reason why mortgage rates are near historic lows. These and other interest rates, which are far lower than typical, have played a critical role in lowering consumer debt service levels.”
Fed presidents this week differed over whether their outlook for the economy requires additional monetary easing. More action “may be needed” to reduce “persistently high unemployment,” San Francisco’s John Williams said Nov. 15 in Scottsdale, Arizona. Boston Fed President Eric Rosengren said yesterday that lower interest rates still have the ability to boost growth. James Bullard of St. Louis said the central bank’s policy is “appropriately calibrated” and should only be loosened if the economy deteriorates.
Pianalto, 57, became president of the Cleveland Fed in 2003. She is not a voting member of the FOMC this year and has never dissented from an FOMC decision. Fed presidents rotate voting on monetary policy, with Pianalto voting every other year.
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