Tags: lacker | fed | low-rate | plan

Lacker: Fed Probably Won’t Need to Hold to Low-Rate Plan

Friday, 03 August 2012 08:47 AM

Federal Reserve Bank of Richmond President Jeffrey Lacker said he opposed the Fed’s decision to keep the main interest rate near zero through at least late 2014 because such accommodation probably won’t be necessary.

“Exceptionally low federal funds rates are not likely to be warranted for this length of time,” Lacker said in a statement Friday. “The Committee’s statement implies more confidence about the persistence of low interest rates than I believe is justified by the current outlook.”

Lacker dissented on Aug. 1 for a fifth consecutive Federal Open Market Committee meeting after policy makers left unchanged a plan to hold the benchmark Fed funds rate at a record low.

“Significant uncertainty regarding the evolution of economic conditions over the next few years makes the future path of interest rates difficult to forecast,” Lacker said.

The FOMC said on Aug. 1 it will pump fresh stimulus if necessary into the weakening economic expansion to boost growth and reduce an unemployment rate that’s been stuck at 8 percent or higher for more than three years.

The central bank also said it will continue swapping $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings, an action dubbed Operation Twist.

© Copyright 2020 Bloomberg News. All rights reserved.

1Like our page
Friday, 03 August 2012 08:47 AM
Newsmax Media, Inc.
Newsmax TV Live

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 Media, Inc.
All Rights Reserved