Published December 03, 2012
U.S. Federal Reserve policymakers are expected to debate whether to keep their total monthly asset purchases steady at $85 billion in the new year when they next meet, on December 11-12.
They are also discussing whether they should adopt numerical thresholds for inflation and joblessness to signal when they might hike rates.
The following are recent comments from Fed policymakers (an asterisk denotes the person is a voting member of the policy-setting Federal Open Market Committee this year):
BOSTON FED PRESIDENT ERIC ROSENGREN, December 3
"A strong case can be made for the Federal Reserve continuing to purchase the current $85 billion in longer-term securities a month - even after our so-called 'Operation Twist' maturity-extension program" ends.
ST. LOUIS FED PRESIDENT JAMES BULLARD, December 3
After Operation Twist's monthly $45 billion program expires, "you could go down to $25 billion in outright purchases and probably get the same stimulative impact."
CHICAGO FED PRESIDENT CHARLES EVANS, December 1
"We are in a period where having low policy rates for a very long time would be helpful."
PHILADELPHIA FED PRESIDENT CHARLES PLOSSER, December 1
"I'm terribly worried that we are asking too much of policy here," Plosser said, of the value of setting thresholds. "I'm worried that the strategies are going to sow more confusion than clarity."
MINNEAPOLIS FED PRESIDENT NARAYANA KOCHERLAKOTA, December 1
"I think we are falling short on both metrics, more so on employment than inflation," he said, referring to the Fed's mandates to keep prices stable and to maximize employment
"I suspect that mortgage purchases may confer more macroeconomic stimulus dollar-for-dollar than Treasury purchases."
"While job growth has picked up some recently, its pace has been insufficient to materially change the labor market picture."
DALLAS FED PRESIDENT RICHARD FISHER, November 29
"Monetary policy provides simply the fuel, but the incentive has to come from our fiscal authorities."
FISHER, November 27
"You cannot expand without limits without horrific consequences...There is no infinity in monetary policy, we know that from the German experience."
EVANS, November 27
"It's important to maintain the overall level of asset purchases at $85 billion, at least for a time until we can see whether or not we are doing better or things are going more slowly, and we can adjust, depending on that assessment."
EVANS, November 27
"I now think a threshold of 6.5 percent for the unemployment rate and an inflation safeguard of 2.5 percent...would be appropriate."
In terms of how far you can go, I don't think that we're anywhere near any kind of limit (on Fed bond-buying programs)...Conceptually, you could imagine some upper limit to this but I don't think we're getting anywhere near it."
"We will want to be sure that the recovery is established before we begin to normalize policy."
"Crisp numerical thresholds may work well in the classroom models used to illustrate policy principles, but one or two economic statistics do not always capture the rich array of policy-relevant information about the state of the economy."
"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."
"Although there are good reasons to be encouraged by the recent direction of the housing market, we should not be satisfied with the progress we have seen so far."
PHILADELPHIA FED PRESIDENT CHARLES PLOSSER, November 15
"I believe the extraordinary policies the Fed has pursued pose substantive longer-term risks: these include moral hazard, future inflation and loss of institutional credibility."
(Reporting by Alister Bull, Jonathan Spicer, Pedro da Costa and Ann Saphir; Editing by Chizu Nomiyama)