Fed’s Lacker Says More QE Won’t Boost Growth While Posing Risk
There’s always a critic it would seem, especially when it comes to monetary policy and the direction Ben Bernanke has taken with Quantitative Easing. Federal Reserve Bank of Richmond President Jeffrey Lacker spoke out against Ben Bernanke’s policies, citing risks that could occur with little potential for growth benefits if Q.E. continues.
Although the Federal Open Market Committee has stated that it will continue making large purchases of bonds, versus tapering off their spending, it has since shifted their opinions to that of uncertainty about the future. Now, although it is still buying, the F.O.M.C. may decide to reduce spending if certain signals are sent concerning inflation and the labor market. Lacker claims that the current pace of purchases will not be sustainable. Also, the amount of regulations and weakness in Europe will pose a risk of hurting businesses. However, Lacker does not have a vote on the current policy at the moment.
“Recent reports on retail sales, factory production and household spending have pointed to a slowdown in economic growth this quarter.” Whether or not that will affect the Fed’s future decisions remains to be seen, since the slowdown could worsen if the wrong actions are taken.