WASHINGTON – Several Federal Reserve officials made clear this week that Chairman Ben Bernanke commands broad support for the Feds plan to continue stimulating the economy if hiring doesnt pick up.
As Vice Chairman William Dudley put it in a speech: If youre trying to get a car moving that is stuck in the mud, you dont stop pushing the moment the wheels start turning – you keep pushing until the car is rolling and clearly free.
Last week, the Fed said it would spend $40 billion a month to buy mortgage bonds to try to make home buying more affordable.
It left open the possibility of taking other steps. And it signaled that the economy would receive help from the Fed even after the recovery strengthens.
On Friday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, stressed that the new round of bond purchases would continue until the job market improves, and if we do not see improvement, more action may be taken.
In a speech Thursday, Eric Rosengren, president of the Boston Federal Reserve Bank, said he was pleased that the Feds policy committee was willing to take difficult actions like these rather than accept the possibility of a long, slow recovery turning into a stagnation that someday earns the dubious title of Great.
Dudley and Rosengren have been leading voices among the officials who favor aggressive intervention to combat chronic high unemployment.
A smaller group of Fed officials have expressed concern that continued stimulative action by the Fed is elevating the risk of high inflation later.
The Feds policy committee will next meet Oct. 23-24. Most analysts say they dont expect any change then, given the major steps the Fed took this month and the fact that the October meeting is so close to the presidential election.
But some say the Fed might decide to do more at its last meeting of the year Dec. 11-12.