Fed’s Mester Says More Fiscal, Not Monetary Support, Is Needed By Bloomberg


© Bloomberg. Loretta Mester, president of the Federal Reserve Bank of Cleveland, pauses during a Bloomberg Television interview at the French central bank and Global Interdependance Center (GIC) conference in Paris, France, on Monday, May 14, 2018. European Central Bank policy maker Francois Villeroy de Galhau said the first interest-rate increase could come “some quarters, but not years” after policy makers end their bond-buying program. Photographer: Marlene Awaad/Bloomberg

(Bloomberg) — Federal Reserve Bank of Cleveland President Loretta Mester said fiscal policy support, not additional monetary-policy action, is what the U.S. needs most as surging Covid-19 infection rates threaten to smother economic activity.

“The virus case increase is very concerning and the fact that we don’t have a fiscal package is very concerning,” Mester said Thursday in an interview with on Bloomberg Television with Michael McKee and Jonathan Ferro (NYSE:).

Mester, a voter this year on the rate-setting Federal Open Market Committee, noted that some sectors of the economy are doing fine while others remain severely damaged.

“With the disparate impact, that’s where fiscal policy plays a role because fiscal policy can be really targeted,” she said, whereas monetary policy is a much more blunt tool for stimulating the economy. “We’re in a good place with our monetary policy because we are very accommodative.”

At its Nov. 4-5 meeting, the FOMC discussed its options for altering large-scale asset purchases as a way to further lower borrowing costs for businesses and households. The Fed is currently buying about $120 billion in Treasuries and mortgage-backed bonds every month, partly aimed at lowering borrowing costs for businesses and households. The Fed’s next meeting is Dec. 15-16.

Asked if she supported a move to adjust or increase the purchases, Mester was noncommittal but didn’t lean in favor of a change.

“It’s not clear to me that monetary policy necessarily is the right tool,” she said. “To my mind when you have such disparity across sectors it’s the fiscal policy that’s the right tool to address those things.”

That bodes poorly for the economy because Congress does not appear poised to act, she added.

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here