Tags: Chicago | Fed | Ease | Jobless

Chicago Fed’s Evans: Easing to Last Until Jobless Rate Falls Below 7%

Monday, 01 Oct 2012 10:07 AM

The Federal Reserve will continue to stimulate the economy with monetary easing tools until the unemployment rate falls below 7 percent, said Chicago Fed President Charles Evans, a big booster of the U.S. central bank's policy easing move last month.

The unemployment rates currently stands at 8.1 percent.

"More accommodation would be appropriate, especially if it's effective," Evans told CNBC.

"By all the analyses I've seen, it will be effective and the inflation risks are not very large at the moment."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

The Fed has said it will buy $40 billion worth of mortgage-backed securities a month from banks to spur recovery, a monetary policy tool known as quantitative easing that works by pumping liquidity into the financial system to spur recovery.

When including past stimulus measures, the Fed will be snapping up $85 billion in assets a month all with the aim of lowering interest rates to encourage investing and with it, hiring.

Growth must take precedence for now, Evans said.

"There's scope for doing more. I would have been doing more for a longer period of time," Evans said.

"The committee made the determination that we're a lot closer to something like unacceptable growth — stall speed — and it's time to do more."

Critics of such ultra-loose monetary policies say they plant the seeds for inflation down the road, though Evans told CNBC that inflation rates haven't risen since stimulus began four years ago.

"I don't see any inflationary pressures," Evans said, adding that rising inflation rates often point to an improving economy.

"The way to get to a point like that is because the economy grows," Evans said.

"Then you get more money in circulation in a productive fashion. Yes, it would be the case that price pressure and interest rates would go up. That would be a healthy thing in terms of the higher interest rates."

Other Fed officials want to see stimulus measures carry on through 2014, including John Williams, head of the Fed's San Francisco bank.

"I would think that we would be stopping the asset purchases well before late 2014," Williams told reporters after a recent speech, according to Reuters.
Short-term interest rates will likely stay near zero until at least mid-2015, Williams said.

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans



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The Federal Reserve will continue to stimulate the economy with monetary easing tools until the unemployment rate falls below 7 percent, said Chicago Fed President Charles Evans, a big booster of the U.S. central bank's policy easing move last month. The unemployment rates...
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Monday, 01 Oct 2012 10:07 AM
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