Federal Reserve Bank of Richmond President Jeffrey Lacker said additional stimulus won't necessarily spur economic growth while increasing the challenges for the Fed when it begins to withdraw the record accommodation.
"The Fed seems to be unable to improve real growth, despite striving mightily over the last few years," Lacker said Wednesday in comments prepared for delivery at the Richmond Fed’s Baltimore office, repeating a May 3 speech. "Further increases in the size of our balance sheet raise the risks associated with the 'exit process' when it’s time to withdraw stimulus."
Lacker, who doesn’t vote this year on the Federal Open Market Committee, has criticized the committee’s decision to press on with monthly purchases of $40 billion a month in mortgage securities and $45 billion of Treasuries that have expanded the Fed balance sheet to a record $3.32 trillion.
The FOMC said May 1 that it may accelerate or slow bond buying in response to changes in the labor market and inflation. It left unchanged its plan to hold the main interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.
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