Fed Pres Fisher, the 3rd member to dissent against the Aug 9 FOMC decision, today is also the 3rd to give their reason for it. After cutting the fed funds rate from 5.25% to basically zero, cutting the discount rate spread from 100 bps to 50bps and expanding their balance sheet from $900b to $2.9T by buying MBS, Agency debt and US Treasuries, Fisher finally said enough is enough and didn’t want to put a date on the length of the zero rate policy. On the economy, he thinks “nonmonetary factors, not monetary policy, are retarding the willingness and ability of job creators to put to work the liquidity that we have provided…Those with the capacity to hire American workers are immobilized. Not because they lack entrepreneurial zeal or do not wish to grow; not because they can’t access cheap and available credit. Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy.” He also blames the debt ceiling debacle as creating major hesitancy on the part of business to do business. “What is restraining our economy is not monetary policy but fiscal misfeasance in Washington…Pointing fingers at the Fed only diminishes credibility.” While I agree with Fisher’s points on fiscal and regulatory policy, deflecting criticism AWAY from the Fed only diminishes his credibility.
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