Fed President Fisher on 2014: Inflation and Economic Growth
Federal Reserve Bank of Chicago President Charles Evans recently discussed his hopes and concerns for 2014. He said he expects growth of U.S. gross domestic product t to reach 2.75 percent but has some anxiety regarding the low inflation rate. Fiscal policy has so far failed to revitalize inflation even with the economic growth, MT Newswire reports.
According to MT Newswire, Evans could be pointing toward a need for further economic stimulus, a stance that others at the Fed don’t see eye to eye on. Dallas Federal Reserve President Richard Fisher would be one such person, and unlike Evans, Fisher has a vote in 2014.
Fisher said he was “very worried” about the bond-buying program at the beginning of this month: “And I expect that my own voting behavior will reflect this concern that I just stated. I don’t think these are programs that should be continued, and I worry about the fact that we’ve already painted ourselves into a corner.”
While quantitative easing was reduced from $85 billion per month to $75 billion, Fisher said it wasn’t enough. “I would have argued for $20 billion,” he said, per MT Newswire. ”I think the market could have digested that.”
Evans also noted that unemployment could very well fall to 6 percent or below by 2015, but added that the Federal Open Market Committee would be looking to keep interest rates down until “well past the time that the unemployment rate declines below 6.5 [percent],” according to Market Watch.
“This elaboration of our forward guidance should more strongly communicate that we are in no hurry to raise rates: We will not prematurely reduce accommodation in an economy with elevated unemployment and very low inflation pressures,” said Evans to Market Watch.