Fed Official Urges Monetary Stimulus to Curve Unemployment

The Federal Reserve should launch a fresh round of monetary stimulus immediately, buying bonds for as long as it takes to produce a steady decline in the jobless rate, a top Fed official said on Monday.

Without a change in policy, the unemployment rate, now at 8.3 percent, was unlikely to fall below 7 percent before 2015 at the earliest, Chicago Federal Reserve Bank President Charles Evans told reporters in Hong Kong.

“I don’t think we should be in a mode where we are waiting to see what the next few data releases bring,” Evans told a seminar at the Hong Kong Bankers Club. “We are well past the threshold for additional action; we should take that action now.”

The U.S. central bank on August 1 kept U.S. monetary policy on hold, leaving interest rates at zero and reiterating the view that economic conditions will warrant keeping them there until at least late 2014.

Many policymakers thought more stimulus would be needed “fairly soon,” the minutes of the meeting show, but wanted to watch the data for signs of improvement that would render moot the need for additional easing.

Evans, who will have a vote next year on the Fed’s policy-setting panel, wants no part of that wait-and-see approach.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza