Chicago Tribune (December 14)
“The Fed helped the nation through a crisis. Now it could be creating risk.” The Fed has indicated it will maintain near-zero interest rates until the unemployment falls below 6.5% or inflation rises above 2.5%. This monetary policy was championed by Chicago Fed President Charles Evans, an inflation dove and policy activist, but the policy is misguided. “At this stage of the recovery, the biggest drags on the employment market have little to do with credit availability and interest rates — factors where the Fed does have influence — and much to do with the failures of elected politicians to fix spending and tax policies…. The central bank just isn’t all-powerful…. The Fed risks becoming a source of the problems it has done so much in recent years to help resolve.”
Tags: Evans, Inflation, Monetary policy, Risk, Spending, Tax, Unemployment
