Dallas Federal Reserve Bank president Richard Fisher said Monday night there is little risk of a double-dip recession but neither is the economy likely to pick up aggressively, so the time is not right to remove the liquidity measures that have supported financial markets.
In an interview on PBS’ Nightly Business Report, Fisher said the Fed is ready to execute its exit strategy to avoid fueling inflation, but will not do so until the time is right. And unfortunately it is not an exact science.
“We will have to remove that accommodation in a timely way once the gears begin to mesh, but right now they’re not meshing,” he said. “We’ll have to wait and make our own judgment ... The question is when is the appropriate time, and it is not right now.”
The exit strategy must be timed so that the accommodation in place will not fuel inflation if the economy picks up aggressively, but Fisher said that “is unlikely in the foreseeable future.”
“The issue right now is excess slack,” he said. “Right now the pressure is not on the inflationary side, it’s on the deflationary side.”
— Market News International
