Federal Reserve Bank of Cleveland President Loretta J. Mester was misquoted regarding interest rates, according to a release issued Wednesday.
The Australian Broadcasting Corp. suggested Mester was discussing use of helicopter money, when a central bank directly finances fiscal stimulus, but the Fed said that was not the case.
To clarify, the Fed released the question, "There's been some talk in this world of low interest rates about the use of helicopter money. What are your views on the effectiveness of that?" and Mester's answer: "We're always assessing tools that we could use. I think in the U.S. we've done quantitative easing and I think that's proven to be useful. So my view is that would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodating."
