“Legitimate reasons” exist to be cautious about quantitative easing and the Fed should consider the costs and benefits before undertaking the task, Federal Reserve Bank of Kansas City president Thomas M. Hoenig said Tuesday.

“Based on recent research and the earlier program of purchasing long-term securities — known as LSAP — I think the benefits are likely to be smaller than the costs,” Hoenig told the National Association of Business Economists’ annual meeting, according to prepared text released by the Fed.

Since the financial markets are far calmer than in the fall of 2008, the effect of asset purchases could be even smaller than the 10 to 25 basis point estimate, according to Hoenig.

Business contacts have told Hoenig “that interest rates are not the pressing issue” causing unemployment, he said.

“Rather, they are concerned with uncertainties around our tax structure; they are desperate to see this matter settled,” he said.

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