Fisher: Value of More Accommodation Is Unclear

Federal Reserve Bank of Dallas president Richard Fisher reacted to calls for further qualitative easing from his Fed peers Thursday by saying the efficiency of further accommodation has not been established.

"Unemployment is not receding quickly enough," Fisher said, according to a text of his speech to the Economic Club of Minnesota. The natural reaction is "to put the monetary pedal to the metal to try to move the needle on employment growth."

He said the debate about quantitative easing within the Federal Open Market Committee needs to include the pros and cons of further monetary accommodation.

"Whatever we [do 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, adding that the problem is not liquidity. "The excess reserves of private banks parked at the 12 Federal Reserve banks exceed $1 trillion."

Fisher suggested monetary policy changes should be used only to a limited degree in attempts to control movements in demand arising from non-monetary sources.

He said the effectiveness of monetary policy is limited by fiscal policy blocks.

The "cost-benefit analysis should include where the inertia of quantitative easing might take us," said Fisher, adding that the chances of a double-dip recession are receding.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER