Tags: fed | fisher | easing | economy

Fed’s Fisher: More Monetary Easing Won’t Fix Economy

Tuesday, 08 May 2012 04:28 PM

Federal Reserve Bank of Dallas President Richard Fisher said that a recent drop in equity prices is no reason for the central bank to intervene to boost the economy.

“Markets are manic depressive, they come and go,” Fisher told reporters Tuesday in Dallas when asked if slumping markets and slower-than-expected employment gains had changed his outlook for Fed policy. “The key to success here is not further monetary accommodation.”

The U.S. central bank last month said the recovery will “pick up gradually,” and upgraded its forecasts for inflation, growth and unemployment for this year. Reports released since then have suggested a more tempered outlook for the economy, with employers adding the fewest number of workers in six months in April.

Fisher said that business owners want clarity on health care costs and taxes, and that trillions of dollars are sitting on sidelines until then. He spoke to reporters following an appearance at an economic forum put on by the Dallas Convention and Visitors Bureau.

While saying he did not support additional monetary easing and that it would not help “until fiscal authorities get their act together,” Fisher also said the central bank should not yet begin unwinding its record stimulus.

“I don’t think we’re ready to exit yet,” Fisher said. “I think we’re getting closer. My personal view is, before you exit you have to stop accommodating.”

Low Interest Rates

The policy-setting Federal Open Market Committee reiterated its pledge to keep interest rates low through at least late 2014 after its April 24-25 meeting, even as it acknowledged improvements in the labor market. Fisher has said he’s opposed to suggesting a date at which the Fed may begin tightening, arguing that the economic outlook is subject to change.

In a sign that the rebound may be losing steam, payrolls climbed 115,000 in April after a revised 154,000 gain a month earlier, Labor Department figures showed May 4. Business activity expanded at the slowest pace since the end of 2009, according to a report released by the Institute for Supply Management-Chicago Inc. April 30.

The Dallas Fed chief isn’t a voting member of the FOMC this year. He dissented last year twice against moves to push down long-term rates and to keep the benchmark U.S. interest rate near zero until at least mid-2013. He voted five times in 2008 in favor of tighter policy.

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Tuesday, 08 May 2012 04:28 PM
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