Regional presidents of the Federal Reserve have been active in speaking out for or against the measures and impact of all of the quantitative easing measures of late. The latest comments come from Federal Reserve president Esther George at a business luncheon in Oklahoma. If you want to know where this is going just recall that Esther George has been the dissenting vote against easy money policies in 2013.
She called the current monetary policy as being overly accommodative. She even said that it has distorted markets and even poses a risk to financial stability and future inflation. Mrs. George even said that taking on the higher risk is something that time will determine if it was successful or not. One point brought up was increased lending around farming land, which has risen sharply in value. George even worries that regulators may not be able to identify and contain the risks that have stemmed from the Fed’s policies.
With monetary policy running somewhere around $85 billion in bond buying with new money, reinvesting principal maturities, and keeping short-term rates at nearly zero, it is easy to agree. She did say that the economy needs an easy monetary policy from the Fed, but not this easy. She even said that the Fed is operating in emergency mode when the crisis is largely over. Her view is that the economy will grow around 2% with gradual job growth.
In 2012 the hawkish governor was Jeffrey Lacker of the Richmond Fed. in 2013 it is Esther George of the Kansas City Fed.
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