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
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Fiscal policy, at both the federal and state and local levels: headwinds for unemployment reduction says Bernanke
The accommodative monetary policies I have reviewed today, both traditional and nontraditional, have provided important support to the economic recovery while helping to maintain price stability… Notwithstanding these positive signs, the economic situation is obviously far from satisfactory… Further, the rate of improvement in the labor market has been painfully slow. I have noted on …Continue reading »
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One of the main policies to reduce long-term unemployment is an active labor market policy. The OECD publishes each year data on Government investments in labor market programs like training and wage subsidies.
Gemany and the Scandinavian countries are champions of active labor market policies. This is well known. But, less known is the fact that the US are not. US investment in active labor market programs before the Great recession wasbelow the OECD average, nearly 4 times lower: 0.13% of GDP vs 0.48%.
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Fed up with the anemic pace of hiring, the Federal Reserve promised Thursday that it would do whatever it takes to reduce unemployment. The Fed stepped up its efforts to boost economic growth, opting for a … http://www.marketwatch.com/story/fed-will-do-whatever-it-takes-to-get-hiring-going-2012-09-13
Federal Reserve – FOMC statement – The Economy has gone from “expanding moderately” to “decelerated somewhat”
Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated… The Committee expects economic growth to remain moderate over coming quarters and then to pick up …Continue reading »