Politics & Policies

FED / Lockhart / Aggressive Easing Needed For Jobs

Federal Reserve Bank of Atlanta President Dennis Lockhart said forceful central bank policies will remain needed to spur job growth even if Congress averts sudden tax increases and spending cuts at the end of the year.

“I expect that continued aggressive use of balance sheet monetary tools will be appropriate and justified by economic conditions for some time even if fiscal cliff issues are properly addressed,” Lockhart said today in Charlottesville, Virginia. Fed easing isn’t aimed at “abetting” fiscal policy by reducing the cost of financing the federal deficit, he said.

Federal Reserve Bank of Atlanta President Dennis Lockhart said aggressive central bank policies will remain needed to spur job growth even if Congress averts sudden tax increases and spending cuts at the end of the year. Photographer: Jonathan Alcorn/Bloomberg

The Atlanta Fed chief voted with the Federal Open Market Committee in October to continue buying $40 billion in mortgage bonds each month until the labor market improves “substantially.” The central bank is also purchasing $45 billion of longer-term Treasuries in a securities-swap program called Operation Twist scheduled to end in December.

“I am not prepared to say we are remotely close to substantial improvement on the employment front,” Lockhart said in a speech to the University of Virginia Investing Conference.

Lockhart said he may be willing to support a strategy of announcing the Fed won’t increase the main interest rate from close to zero before hitting numerical thresholds for the unemployment rate and inflation.

“It’s possible to get to a threshold number for unemployment as long as we present it as indicative of a broader evaluation” of labor-market conditions, Lockhart told reporters after the speech…

Choosen excerpts by JMM from

via Fed’s Lockhart Says Aggressive Easing Needed to Spur Jobs – Bloomberg.

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