Tags: George | Federal Reserve | taper | uncertainty

Fed's George Calls for QE Taper Despite Fiscal 'Uncertainty'

Thursday, 17 October 2013 03:17 PM

Federal Reserve Bank of Kansas City President Esther George, who has voted this year against expanding stimulus, said the Fed has enough data to assess the economy’s strength and should taper its $85 billion in monthly bond buying even amid fiscal “uncertainty.”

“The evidence suggests the benefits of quantitative easing have been quite small and the costs have continued to grow,” George said in a speech in Oklahoma City, Oklahoma. While policymakers “are missing a few pieces of data,” she said, “we are still quite able to monitor and judge the economy’s progress.”

A deadlock over the federal budget led to a 16-day partial shutdown of the government that Congress voted to end. Standard & Poor’s said suspending government operations shaved at least 0.6 percent from fourth-quarter 2013 gross domestic product growth, taking $24 billion out of the economy.

The “fiscal shenanigans” undermined the case for tapering the Fed’s $85 billion in monthly bond buying, Dallas Fed President Richard Fisher, an opponent to increasing stimulus, said. Chicago Fed President Charles Evans, an outspoken advocate of greater stimulus, said the central bank shouldn’t begin reducing bond purchases because the government during the shutdown halted data used to gauge the economy’s health.

“We will continue to see uncertainty in some form” regardless of the outcome of fiscal policy, George said in reply to an audience question. “We will need to keep our eyes focused on the long term.”

U.S. employment grew at a “modest pace” last month, George said. She predicted the U.S. Senate will confirm Vice Chairman Janet Yellen as chairman of the Fed, succeeding Ben S. Bernanke when his term ends in January.

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Federal Reserve Bank of Kansas City President Esther George, who has voted this year against expanding stimulus, said the Fed has enough data to assess the economy's strength and should taper its $85 billion in monthly bond buying even amid fiscal "uncertainty."
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2013-17-17
Thursday, 17 October 2013 03:17 PM
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