Fed policymakers broadly agree that unemployment, at 8.1 percent, is much too high; most agree also that inflation, which has hovered near the Fed’s 2 percent target, is well under control.
But there continue to be deep rifts within the central bank over the best policy response.
“I am optimistic that we can achieve better outcomes through more monetary policy accommodation,” Chicago Fed President Charles Evans told a group of local business people on Tuesday at a breakfast sponsored by the Bank of Ann Arbor.
A tireless advocate of further easing for the past few years, Evans nodded to the Fed’s policy-setting panel’s overwhelming support for QE3 — the vote was 11-1, with just Richmond Fed President Jeffrey Lacker dissenting.
“It seems like I am a little less outside of the consensus than I was earlier,” he told the group.
Indeed, the U.S. central bank could do still more, Evans said, including stating a tolerance for policies that could produce slightly higher inflation as long as those policies also bring down the jobless rate.
Yet minutes before Evans was due to speak, Dallas Fed President Richard Fisher, a forceful opponent of further easing, said he would have dissented last week if he had a vote on the policy-setting panel this year.
“I would argue that it is less impactful right now because you have other things inhibiting businesses from making decisions on capex and employment,” Fisher told CNBC. “I don’t think this program will have much efficacy.”