CHARLOTTE — Richmond Federal Reserve Bank President Jeffrey Lacker said Tuesday he does not expect much of an uptick in growth in 2014, and even without the Fed's easy money policy, growth in 2013 would have been around 2%.
"My baseline doesn't have pickup in growth next year," Lacker told reporters. "I don't know where it's going to come from."
Lacker, who opposed the latest large-scale asset purchase program, said even without QE3, growth would be about 2%. He did, however, say it was "plausible" that the makeup of the growth may have been different than it is today.
The Federal Open Market Committee has been buying $85 billion in Treasuries and agency mortgage backed securities each month since late 2012, which has helped spur growth in the housing sector. The policymaking committee surprised markets in September when it decided to keep its pace of buying constant.
Speaking to reporters following a speech focused on the need for early development of workforce skills, Lacker said fiscal policy makes the job of the central bank harder, but the fiscal fighting in Washington is not a big concern to him when deciding whether or not to taper.
"In my mind, prospects for fiscal negotiations and the government shutdown didn't warrant forgoing tapering," Lacker said. "For me, it didn't seem like a decisive reason not to taper."
Lacker said the direct economic effect of the partial two week government shutdown and the debate over raising the debt ceiling was minimal. He called the impact "modest" and "transitory" repeating comments from other Fed officials that back pay and the shifting of federal contract work would keep effects limited.
However, he pointed out some risks with the Fed's expanding balance sheet.
"Our ability to provide stimulus through balance sheet expansion is uncertain," he said. "We're not quite clear that we understand the effects. It's not quite clear that we know they're strong or not."
Lacker, who is not a voter on the policymaking committee until 2015, added: "We're doing this under the supposition that 'if it helps, it's good.' But we're not doing it out of a strong sense of conviction that the effects on real economic activity are large."
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