Tags: fed | fisher | jobs | inflation

Fed's Fisher: Biggest US Problem Is Unemployment, Not Inflation

Monday, 24 Oct 2011 11:40 AM

High unemployment, not inflation, is the biggest problem facing the U.S. economy today, a top Federal Reserve official known for his hawkish views on inflation said on Monday.

"Inflation is not the problem in the United States right now," Dallas Fed President Richard Fisher said in Toronto. "The trending analysis here at the Dallas Federal Reserve indicates that inflation will trend toward 2 percent. I buy that analysis," he said.

"That's not the issue, the issue is unemployment and job creation. We have to figure out how to put people back to work," he said, warning unemployment can lead to social disorder like that sweeping Greece.

Fisher, a voting member of the policy-setting Federal Open Market Committee, has said that the Fed has done all it can to stimulate growth in the economy.
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Both the Tea Party and the Occupy Wall Street movements are symptoms of dissatisfaction with the way politicians are handling the nation's fiscal policies, Fisher said, repeating his view that the Fed has already filled the "gas tank" of the economy but politicians need to make sure that gas gets used.

Fisher was one of three policymakers who dissented in August and September against decisions to ease monetary policy further.

Meanwhile, the Federal Reserve, which has eased policy at its two most recent meetings, should take some time to evaluate the effect of its actions before doing anything further, Fisher said.

"The Fed does not have to act at every meeting," Fisher said.

Fisher dissented on the Fed's decision in August to freeze interest rates near zero through mid-2013, and in September to rebalance its portfolio with longer-dated securities, a program known as "Operation Twist."

The Texan has argued that more easing will not be effective unless politicians clarify fiscal policy.

It is unclear if the Fed's "Twist" operation was effective, Fisher said, noting that 10-year Treasury yields, which initially fell, have risen recently.

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High unemployment, not inflation, is the biggest problem facing the U.S. economy today, a top Federal Reserve official known for his hawkish views on inflation said on Monday. Inflation is not the problem in the United States right now, Dallas Fed President Richard...
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2011-40-24
Monday, 24 Oct 2011 11:40 AM
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