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Class 24 FED Presidents on Stimulus

Class 24 FED Presidents on Stimulus - WSJ U.S Central...

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11-15-2011 WSJ U.S. Central Bankers Duke It Out in Stimulus Debate By Michael S. Derby Central bank officials spent Tuesday duking it out over whether they need to provide even more help to spur growth in a weak U.S. economy. At issue for central bankers is whether the Federal Reserve will at some point over the coming months increase the amount of stimulus it is providing the economy. The officials are confronting an economy that is eking out only modest rates of growth amid levels of high unemployment not seen in decades. The officials don’t seem to agree whether inflation gives them room to act or ties their collective hand. Over the end of the summer and the start of the fall, the central bank increased its support to the economy. In August the Fed announced that if the economy plays out as expected, interest rates will stay very low until the middle of 2013. Then, in September, Fed officials decided to sell some $400 billion in short-dated bonds they had been holding, to buy a like amount of longer-dated securities. The latter effort leaves the overall size of the Fed’s massive balance sheet steady, while in theory increasing its potency by pushing down long-term borrowing costs.
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