Courtesy of Mish.
Inquiring minds are investigating three articles from today, stating opinions of three different Fed governors.
Boston Fed President Against Tapering
Boston Fed President Eric Rosengren says Rapid QE withdrawal could permanently harm U.S. workers
A dovish U.S. central banker on Saturday again urged the Federal Reserve to be patient as it trims its support for the economy, in part because it risks permanent damage to the labor market.
Boston Fed President Eric Rosengren dissented against the central bank’s landmark decision last month to reduce its bond-buying program by $10 billion to $75 billion in purchases per month. In a speech here, he repeated it was a mistake because unemployment remains too high and inflation too low.
“Policymakers have the opportunity to be patient in removing accommodation, speeding up the process of achieving both elements of the Fed’s dual mandate” of maximum sustainable employment and inflation of around 2 percent, he said.
Plosser at Odds with Yellen’s Approach
Yahoo!Finance reports Fed’s Plosser at odds with policy approach favored by Yellen.
The Great Recession could have done permanent damage to potential U.S. output, a top Federal Reserve official said on Saturday, taking an indirect shot at more cyclical approaches to policy-making that is favored by many economists, including the next Fed chair.
Philadelphia Fed President Charles Plosser said in a speech he is skeptical of so-called “optimal control” approaches to monetary policy in which mathematical models are used to predict when things like unemployment and economic growth will return to more normal levels.
Fed Vice Chair Janet Yellen, who is set to take the reins at the U.S. central bank next month, has often touted this approach, including tolerating higher inflation for a short time in order to speed up the overall economic recovery.
Dudley Admits He’s Unclear How QE Works
Rounding out our trio of articles from today, please consider Still unclear exactly how QE eases conditions: Fed’s Dudley.
Extensive research into massive asset-purchase programs has not yet clarified whether such policies ease financial conditions primarily as a signal to investors or more directly through private portfolios, an influential U.S. central banker said on Saturday.
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