Tags: Fisher | market | Fed | QE

Dallas Fed's Fisher: Market Volatility Shouldn't Delay End to QE

By    |   Monday, 20 October 2014 11:12 AM

While the recent volatility in financial markets has led some commentators to call for an extension of the Federal Reserve's quantitative easing (QE) program, Dallas Federal Reserve Bank President Richard Fisher disagrees.

The Fed has indicated it will announce an end to new bond purchases at its policy meeting this month, and Fisher tells CNBC his support for that timetable hasn't changed "one iota."

As for volatility, the CBOE Volatility Index (VIX) has soared 74 percent since the S&P 500 index hit a record high Sept. 19. And the S&P 500 fell as much as 10 percent since then.

"We've been floating this market with the Ritalin of easy monetary policy," Fisher quips. The stock market may well endure a correction as the Fed curbs its stimulus. But "the underlying economy is doing well," which means the Fed should still end QE.

"We're doing well and will continue to do well. I don't personally see any need to not curtail [QE] at the end of our next meeting."

While many expect the Fed to start raising rates in mid-2015, Fisher states that "it depends on how the economy progresses here, we've had a sharp drop in national unemployment."

Fisher does not see inflation heating up anytime soon. "We have price stability, and that's the important factor."

From the beginning of the Fed's QE, "indiscriminate investing took place, [and] all boats rose regardless of underlying value," he adds. Now, "people will actually have to do work, have to understand analysis to make good investments."

Fisher isn't the only Fed policymaker who believes recent financial market volatility shouldn't change the central bank's policy.

"Just based on a short period of volatility, that's not enough for me to make much of an adjustment," Boston Fed President Eric Rosengren tells The New York Times.

"We need more time to evaluate whether we should be doing any updating. And I would say the financial market movements have not been triggered by very many real economic indicators."

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While the recent volatility in financial markets has led some commentators to call for an extension of the Federal Reserve's quantitative easing (QE) program, Dallas Federal Reserve Bank President Richard Fisher disagrees.
Fisher, market, Fed, QE
332
2014-12-20
Monday, 20 October 2014 11:12 AM
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