NEW YORK - Reacting to other Federal Reserve Bank presidents' calls for further qualitative easing, Richard W. Fisher Federal Reserve Bank of Dallas President and CEO said "the efficacy of further accommodation at this point has yet to be established."
"Unemployment is not receding quickly enough," Fisher said, according to text of his speech Thursday before the Economic Club of Minnesota, which was released by the Fed, so the natural reaction is "to put the monetary pedal to the metal to try to move the needle on employment growth."
However, the FOMC must debate quantitative easing, including "the pros and cons and costs and benefits of further monetary accommodation. Whatever we might do, if anything, must be consistent with long-term price stability and not add to the nightmare of confusing signals already being sent to job creators," he said.
Fisher believes the problem is not liquidity. "The excess reserves of private banks parked at the 12 Federal Reserve Banks exceed $1 trillion."
Monetary policy changes, he suggested, "should be used only to a limited degree in attempts to control movements in demand arising from non-monetary sources." Monetary policy's effectiveness is limited by "fiscal policy blocks," Fisher said, adding that the "cost/benefit analysis should include where the inertia of quantitative easing might take us."
He repeated his belief that the chances of "a double-dip recession are receding, [but] the pace of the recovery is obviously subpar."
