Things only get worse:
Lockhart remains skeptical that more easing would be effective, given “constricted” banking and financial channels.
Last month, Lockhart had said the absence of shocks, further growth in confidence and simply letting more time pass will help him determine if the recovery has gained real traction.
The central banker recalled the optimism most economists had at the start of 2011, only to be burned by a string of dismal economic readings later that spring. While he admitted he’s “pretty confident” the economy is picking up steam and that growth this year will be better than the last, Lockhart said in February he’s practicing “vigilant restraint,” meaning he will remain in wait-and-see mode before suggesting any changes to the Fed’s existing policy stance.
Williams likes to play “it´s hot, it´s cold”:
While the economy’s prospects have brightened, it remains very possible the Federal Reserve may have to provide fresh stimulus to the economy by way of more balance sheet expansion, a key central bank official said.
“We may need to do more if the recovery falters or if inflation stays well below 2%,”Federal Reserve Bank of San Francisco President John Williams said. “If the economy does need more stimulus, restarting our program of purchasing mortgage-backed securities would probably be the best course of action,” he said, although he added, “the policy actions the Fed takes will depend on how economic conditions develop.” (i.e. “vigilant restraint”)
- In the end, they´re all practicing “vigilant restraint”
- Four years is “not a long enough wait”
- Some are “skeptical” and some are “crazy” (in the sense they think always doing the same thing will bring forth a different result)
- The “big boss” is incomprehensible:
The dual objectives of price stability and maximum employment are generally complementary. Indeed, at present, with the unemployment rate elevated and the inflation outlook subdued, the Committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives. However, in cases where these objectives arenot complementary, the Committee follows a balanced approach in promoting them, taking into account the magnitudes of the deviations of inflation and employment from levels judged to be consistent with the dual mandate, as well as the potentially different time horizons over which employment and inflation are projected to return to such levels.
Update: Bullard voices his opinion. It´s more of the same, just slightly different wording:
Asked whether the Fed has ruled out a third round of quantitative easing, Bullard said that “we never take anything off the table, we want to keep our options open,” because the economy can be unpredictable (doesn´t that sound like “vigilant restraint”?).
“But for now, things are looking better for the U.S. economy and I think it’s a good time to wait and see, collect more data,” he said.