May 16, 2012 11:30 AM CT
Federal Reserve Bank of St. Louis President James Bullard said fiscal policies are needed to reduce the 8.1 percent U.S. unemployment rate and additional asset purchases by the Fed, or quantitative easing, would risk a surge in inflation.
“It may be better to focus on labor market policies to directly address unemployment instead of taking further risks with monetary policy,” Bullard said in Louisville, Kentucky. “If anything, the committee may be trying to do too much with monetary policy, risking monetary instability for the U.S. and the global economy.”
The policy-making Federal Open Market Committee on April 25 reiterated its expectation that subdued inflation and economic slack will probably warrant “exceptionally low levels for the federal funds rate at least through late 2014.” Bullard has said he is opposed to such a pledge because policy should be made in response to economic data and not rely on a public timetable.
“The U.S. macroeconomic data have been stronger than expected as of last autumn,” Bullard said to business people and community leaders in a presentation hosted by the St. Louis Fed. “The main risk is that the committee will, as it has in the past, overcommit to the ultra-easy policy. The policy has been appropriate so far, but could reignite a 1970s-type experience globally if pursued too aggressively.”
Bullard also said near-zero interest rates could be creating “distortions” in the economy, including “punishing savers.”
Payrolls climbed by 115,000 workers in April, the smallest increase in six months, Labor Department figures showed. The jobless rate fell to a three-year low of 8.1 percent as people left the labor force, adding to worries that the economic expansion is cooling.
Fed officials have been discussing how much of the U.S. unemployment rate has been caused by “structural” factors such as a mismatch of worker skills and available jobs. Richmond Fed President Jeffrey Lacker said the mismatch may lead to a higher natural rate of unemployment. Fed Chairman Ben S. Bernanke said “continued weakness in aggregate demand is likely the predominant factor” in unemployment.
“Labor market policies such as unemployment insurance and worker retraining have direct effects on the unemployed,” Bullard said in his presentation.
If the U.S. economy encountered another shock, Bullard said “the committee can respond as appropriate to a significant deterioration” in the outlook.
Bullard also repeated his call for the Fed to produce a quarterly monetary policy report that would “provide a more fulsome discussion of the outlook for the U.S. economy.”
Lacker, as well as the presidents of Fed banks in San Francisco, Atlanta and Philadelphia, have said since the FOMC meeting that more Fed stimulus probably won’t be needed.
In a press conference following the April 24-25 meeting, Bernanke signaled that further easing is unlikely unless the economy unexpectedly deteriorates. Bernanke said it would be “reckless” to pursue policies that would drive up inflation when it’s already near the Fed’s target, while noting he’s “prepared to do more” should conditions worsen.
Bullard, who doesn’t vote on monetary policy this year, was the first Fed official in 2010 to call for a second round of asset purchases by the central bank. The Fed pushed down its targetinterest rate close to zero in December 2008 and has engaged in two rounds of asset purchases totaling $2.3 trillion to boost the economy.
Bullard, 51, joined the St. Louis Fed’s research department in 1990 and became president of the regional bank in 2008. His district includes Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
Ben Bernanke was born on December 13th, 1953 according to http://en.wikipedia.org/wiki/Ben_Bernanke
December 13th, 1953
12 + 13 +2+0+1+1 = 29 = his personal year (from December 13th, 2011 to December 12th, 2012) = Barack Obama. Teamwork. Cooperation.
29 year + 5 (May) = 34 = his personal month (from May 13th, 2012 to June 12th, 2012) = Crash. Things happen really quickly. Generating a buzz.
34 month + 17 (17th of the month on Thursday May 17th, 2012) = 51 = his personal day = Government. President. Harsh reality.
comprehensive summary and list of predictions for 2012:
discover some of your own numerology for FREE at:
learn numerology from numerologist to the world, Ed Peterson:
Sex Numerology available at: