The U.S. Federal Reserve cannot effectively fight high unemployment unless Congress and President Barack Obama “get their act together” and fix the nation’s fiscal problems, a top Fed official said on Thursday.
“As long as inflationary expectations are held at bay, we can fully open the monetary throttle in an effort to deliver on the mandate Congress gave us to help achieve full employment,” Dallas Fed President Richard Fisher said in remarks prepared for delivery to the Economic Club of New York.
“But it is for naught as long as the fiscal authorities are slamming on the brakes and leaving everyone in the dark as to how they will cure the fiscal mess they have wrought.”
U.S. lawmakers late Wednesday approved a deal to reopen the government after a 16-day shutdown. The measure resolves no fundamental differences on spending and taxes that divide Democrats and Republicans.
By funding government only through January 15 and extending U.S. borrowing capacity until February 7, the measure leaves open the possibility of another government shutdown – and potentially another debt crisis – early next year.
“Kicking the can down the road for a few months will not solve the pathology of fiscal misfeasance that undermines our economy and threatens our future,” Fisher said.
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