Fed official says central bank should keep trying to boost growth
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Although the Federal Reserve’s efforts to stimulate the economy and boost job creation haven’t had great success so far, that shouldn’t discourage the central bank from continuing its efforts, Fed Governor Sarah Bloom Raskin said Monday.
Her message was a version of the old adage, ‘If at first you don’t succeed, try, try again.’
In a speech at the University of Maryland, Raskin said that although the Fed’s easy-money policies have succeeded in keeping interest rates down, their effect on growth and job creation have been ‘somewhat more muted than I might have expected.’
The reasons for that could include the trouble banks and consumers have had accessing credit as well as the oversupply of housing caused by the crash of the real-estate market, she said.
But, Raskin said, the conclusion shouldn’t be that more monetary easing wouldn’t help.
‘Indeed, the opposite conclusion might well be the case -- namely, that additional policy accommodation is warranted under present circumstances,’ she said.
Raskin, an Obama nominee who took office in October, has supported Fed Chairman Ben S. Bernanke’s controversial efforts to try to stimulate economic and job growth.
The Fed’s efforts have been sharply criticized as fueling inflation, and top congressional Republican leaders wrote to Bernanke last week urging him against ‘further extraordinary intervention’ in the economy.
But Bernanke has been undeterred and has continued to pursue new strategies. They include a $400- billion initiative approved last week to sell some short-term Treasury bonds in its portfolio and buy longer-term bonds in hopes of reducing long-term interest rates.
Raskin was one of six members of the Fed’s Open Market Committee that approved the plan, dubbed Operation Twist. Three members voted against it.
-- Jim Puzzanghera