Bloomberg News

Fisher Says New QE Is ‘Wishful Thinking’ by Wall Street

February 27, 2012

(Updates with comment in third paragraph.)

Feb. 23 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher said additional asset purchases by the central bank are unnecessary and calls for such a move are “wishful thinking” by Wall Street.

“Our job is not to prop up the Street,” Fisher said today in an interview on CNBC. “We are working on the real economy.” Some investment professionals appear to have “wishful thinking” for more accommodation, he said.

Fisher said he disagreed with the Federal Open Market Committee’s Jan. 25 pledge to keep rates near zero at least through late 2014, extending a previous date of mid-2013 or later. The committee, in a policy statement, said the economy was expanding “moderately, notwithstanding some slowing in global growth,” which posed “significant downside risks.”

“I thought the statement was talking down the economy” amid recent improvement, Fisher said. He said he views the 2014 pledge as “that rates will stay low for as long as it is practicable,” or “until we see improvement in the economy.”

The Dallas Fed president, who doesn’t vote on policy this year, has been among the most vocal internal Fed critics, dissenting last year twice against moves to push down long-term rates and to keep the benchmark U.S. interest rate near zero until at least mid-2013. He voted five times in 2008 in favor of tighter policy.

“The tone is a lot better” for economic data, including today’s report that the number of Americans filing first-time claims for unemployment insurance payments last week held at a four-year low, Fisher said in the televised interview. “Things are getting better, not worse.”

Signs of Improvement

“I don’t see a need personally” for more asset purchases, Fisher said. The housing market, a focus for improvement through quantitative easing, has shown signs of improvement, he said.

“We’re seeing the housing market regain its footing” based on recent data, Fisher said.

The Standard & Poor’s 500 Index was little changed at 1,356.87 in New York at 10:33 a.m., while yields on 10-year Treasury notes rose one basis point, or 0.01 percentage point, to 2.01 percent.

Fed Chairman Ben S. Bernanke said during a press conference after the Jan. 25 FOMC meeting that the Fed is keeping the option open of buying more bonds. The central bank pushed down the main interest rate close to zero in December 2008 and has engaged in two rounds of asset purchases totaling $2.3 trillion to boost the economy and reduce the jobless rate of more than 8 percent.

Fisher, 62, has been president of the Dallas Fed since 2005. His district includes Texas, northern Louisiana and southern New Mexico.

--Editors: James Tyson, Gail DeGeorge

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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