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Category: Money

Economic Data Still Unsatisfactory, Fed Official Said

Written on June 07, 2011 by Lulu

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Recent economic data and reports are still disappointing and could interrupt the Fed's move out from its easy financial policy .

The president of Boston Federal Reserve Bank, Eric Rosengren, told CNBC in an interview that the slowdown does change when the appropriate exit strategy has come. He said that it was too untimely to deliberate whether the should set out on a third round of quantitative easing, but did not rule out. As well as cutting down the rates to near zero in December 2008, the has more than tripled its balance sheet to around $2.7 trillion. Its $600 billion second round of quantitative easing also known as QE2, conclude this month.

Philadelphia Fed President, , and Dallas Fed President, , expressed strong opposition to doing more. They voted on the policy this year, while Eric Rosengren did not. Richard Fisher said in a Market News International Conference in New York that the Fed has done sufficiently enough, if not too much, to aid the . He also said that he personally do not foresee additional accommodation. Richard Fisher anticipates economic growth to accelerate in the second half of this year. He also expects to be tempered as the temporary boost from rising energy and commodity prices deteriorate.

Charles Plosser, attending at a Global Interdependence Center conference in Helsinki, said the obstacle for the Fed to do more would be “very high”. He said the Labor department’s “unsatisfactory” employment report on Friday had not basically changed his medium term mindset. In their April meeting, the Fed indicated that it was in no rush to tighten finances policy. Yet minutes of that meeting displayed policymakers debating potential exit strategy options at length. Charles Plosser said the Fed may recover and loose tighten policy by the end of the year, though he emphasized that this would depend on the recuperation.

When asked about cutting the expenditures, suggested Fed officials should keep the fiscal policy backdrop in mind when considering .

“If fiscal policy is much more restrictive, then that would argue for monetary policy being somewhat easier going forward,” Ben Rosengren told CNBC.

Richard Fisher, for his opinion, said he would worry if the Fed eased financial policy again. Because it could alert Congress to put off needed hard choices on the deficit.

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