Tags: Fed | Fisher | Stimulus | Deadlock

Fed's Fisher: Stimulus Lacks Potency Amid Fiscal Deadlock

Tuesday, 04 Jun 2013 08:43 PM

Federal Reserve Bank of Dallas President Richard Fisher said that without clarity in U.S. fiscal policy the Fed is "pushing on a string" through its record stimulus and risks stoking inflation.

"The Fed has no hope of moving the economy to full employment, despite having pulled out all the stops on the monetary front, unless our fiscal authorities get their act together," Fisher said Tuesday in the text of a speech in Toronto. "Until then, I argue that the Fed is, at best, pushing on a string and, at worst, building up kindling for speculation and, eventually, a massive shipboard fire of inflation."

The Federal Open Market Committee said May 1 that it will keep buying $85 billion a month in bonds until it sees a "substantially" improved labor market. Fisher, who doesn’t vote on policy this year, has been among the most vocal critics at the Fed of additional accommodation.

For businesses, "decision-making in a thick fog of uncertainty is well-nigh impossible," Fisher said at the C.D. Howe Institute Directors’ Dinner. The confusion "negates the power of hyper-accommodative monetary policy to propel our economic vessel forward."

Fed policy makers are debating when to begin reducing the pace of monthly bond-buying, with minutes of the April 30-May 1 meeting showing that many officials preferred to see more progress in the labor market before curtailing the program.

Kansas City Fed President Esther George, who has dissented against record stimulus at every policy meeting this year, urged the central bank to begin slowing the stimulus as growth quickens and low interest rates encourage investors to take on more risk.

"Waiting too long to acknowledge the economy's progress and prepare markets for more-normal policy settings carries no less risk than tightening too soon," she said Tuesday in the text of a speech in Santa Fe, New Mexico. She was unable to speak because of illness.

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Headline
Dallas Fed President Richard Fisher said that without clarity in U.S. fiscal policy the Fed is "pushing on a string" through its record stimulus and risks stoking inflation.
Fed,Fisher,Stimulus,Deadlock
312
2013-43-04
Tuesday, 04 Jun 2013 08:43 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved