Tags: Sun | Fed | stonewalling | Congress

New York Sun: Fed Engaged in 'Stonewalling' of Congress

By    |   Friday, 17 July 2015 06:01 AM

New York Sun editors aren't too impressed with Federal Reserve Chairman Janet Yellen's resistance to greater oversight of the central bank's monetary policy by Congress.

"It’s nothing short of amazing to see the stonewalling of Congress by the Federal Reserve," they write. "The Fed (and it’s not just Yellen) is far too defensive."

There's a good reason for her defensiveness, the editorial states. "We have consumed an entire presidency waiting for a full recovery from the recession that struck in 2008, a recession that the leaders of the Federal Reserve — both Ben Bernanke and Yellen — have confessed they failed to see."

The Fed has been slow to raise interest rates back to normal levels, Sun editors note. The central bank's federal funds rate target has stood at a record low of zero to 0.25 percent since December 2008. And its balance sheet has ballooned to $4.5 trillion.

"A braver, more visionary Fed leadership would welcome" congressional input, the editorial says.

Some policymakers and economists share the Sun's concern about the Fed's slow path to raise rates.

Esther George, president of the Kansas City Fed, says the central bank is repeating its policy mistake of 2004, the Financial Times reports.

The central bank, led then by former Chairman Alan Greenspan, let inflation rise "persistently" above 2 percent and the job market over-expand "amid one of the most historic credit bubbles in U.S. history," she said.

The situation may look different now, but "economic trends and experience suggest otherwise," George said. She wants the Fed to act on rates now.

The personal consumption expenditures index, the Fed's favored inflation gauge, climbed only 0.2 percent in the 12 months through May. But the unemployment rate fell to a seven-year low of 5.3 percent in June.

Jim O’Sullivan of High Frequency Economics also thinks the Fed is moving too slowly. "They are a bit behind the curve," he told the FT. “They are being risk-averse and erring on the side of starting late, but by many standard models they should have started tightening before this.”

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New York Sun editors aren't too impressed with Federal Reserve Chairman Janet Yellen's resistance to greater oversight of the central bank's monetary policy by Congress.
Sun, Fed, stonewalling, Congress
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2015-01-17
Friday, 17 July 2015 06:01 AM
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