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Atlanta Federal Reserve Bank President Dennis Lockhart spoke exclusively with FOX Business Network about the battle in Washington over raising the debt ceiling and the impact the decision will have on the United States economy. When asked if he would support additional federal stimulus to aid in the economic recovery, Lockhart said he is in a “wait and see mode” and he is “not sure the returns to further stimulus would be all that great.” He went on to say that Federal Reserve Chairman Ben Bernanke’s statement about it taking two or three meetings before the Fed evaluates the need for additional stimulus was “purposely undefined” and there is a “very high bar” to warrant “implementation of another round” of stimulus money.
On whether he supports additional government stimulus to aid in the economic recovery:
“I am really in a wait and see mode. I am not sure the returns to further stimulus would be all that great.”
On under what conditions he would he support QE3:
“I think there is a very high bar to a second round of quantitative easing. The conditions we are facing now are not the conditions we faced last November when it was implemented. At that time we were looking at the potential for deflation in the economy. I would never take any option off the table, but I do think it’s a very high bar to implementation of another round.”
On how long before the Fed determines whether the economy is in need of additional stimulus:
“The chairman said at least two or three meetings and it could go much longer. I view it as a purposely undefined term that means that the policy will stay in place for a reasonable number of months and the shortest that it means is two or three meetings.”
On whether he agrees with Federal Reserve Chairman Ben Bernanke that failing to raise the debt ceiling would be “calamitous” to the U.S. economy:
“I certainly do. I agree whole heartedly. The debt ceiling has to be raised. We are risking some serious downsides to the economy if this is not done. I certainly emphasize what the chairman said; the outcome could be calamitous.”
On Bernanke’s warning about the economic impact of cutting government spending “too fast, too soon”:
“It’s a good argument. I am fixated on the debt ceiling issue and the near term effects. Certainly the government is a big part of the economy, it will be a shrinking part of the economy in the future and we are going to have to deal with the reality of fiscal austerity at some stage in the future.”
On the state of the United States economy:
“It’s going slow. We are growing; that’s an important point. We are still recovering. I think many of the influence on the economy in the half are temporary and we will see them subside as the year goes on. I am still predicting we will have a much stronger second half and a stronger beginning to 2012. Clearly the first half of the year is disappointing.”
On how the Fed can help stimulate job creation:
“I think what the Fed can do is sustain its current policies until its clear we are seeing much stronger growth and progress in bringing unemployment down.”
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