Friday, December 14, 2012

Two Fed officials speak out against the latest FOMC policy decision

We are seeing some dissent among the Fed officials with respect to this week's decision.

1. Richmond Federal Reserve President Jeffrey Lacker, who voted against the FOMC's last policy decision, remains uneasy:
Reuters: - "I do not believe that tying the federal funds rate to a specific numerical threshold for unemployment is an appropriate and balanced approach to the FOMC's price stability and maximum employment mandates," he said in a statement, referring to the Federal Open Market Committee.
Focusing on MBS purchases pushes capital into the housing sector - and according to Lacker should be left to the federal government, not the central bank.
Reuters: - "Deliberately tilting the flow of credit to one particular economic sector is an inappropriate role for the Federal Reserve," he said, adding that trying to influence credit allocation within the economy was a function of fiscal policy.
2. Dallas Fed President Richard Fisher calls the latest FOMC action a "Hotel California" policy (with respect to the expansion program, you can "check out anytime you like, but never leave").




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