{"id":283380,"date":"2010-02-05T15:50:33","date_gmt":"2010-02-05T20:50:33","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/02\/05\/kansas-city-feds-hoenig-explains-his-dissenting-vote\/"},"modified":"2010-02-05T15:50:33","modified_gmt":"2010-02-05T20:50:33","slug":"kansas-city-fed%e2%80%99s-hoenig-explains-his-dissenting-vote","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/283380","title":{"rendered":"Kansas City Fed\u2019s Hoenig Explains His Dissenting Vote"},"content":{"rendered":"

Federal Reserve Bank of Kansas City<\/strong> President Thomas Hoenig<\/strong> became a voter on the Federal Open Market Committee last week, and right off the bat he became the first central banker in a year to dissent on policy<\/a>. He wanted the Fed to remove language from its statement saying that rates would stay low for “an extended period.”<\/p>\n\n\n\n\n
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On Friday, Mr. Hoenig explained his dissent for the first time. “I think policy makers need to have the broadest options possible and the language that we use that is ‘very low for an extended period’ was appropriate during the height of the crisis to assure that we were not going to make any changes,” he said in an interview with PBS’s “Nightly Business Report,” according to a transcript released by the program. “But now the economy is beginning to recover. It has been in recovery now for two quarters. We have to be thinking a little bit longer ahead and that\u0092s really what my admonition was … that we need to broaden options at this point.”<\/p>\n

Mr. Hoenig, one of the most hawkish regional bank presidents, didn’t say that the Fed’s interest-rate target should be increased now. But he said the central bank should have more flexibility to raise rates as economic data improve. “Let\u0092s say the economy grows more quickly that I even anticipate. We should be prepared to have the ability to make changes. Or if it does grow slower, then we can always extend this very low interest rate environment. The main thing is to be able to make choices in a timely manner and that\u0092s what it\u0092s all about.”<\/p>\n

The Fed’s target eventually should be “at least higher than 3%,” Mr. Hoenig said. “That\u0092s quarters or maybe even years ahead depending on how the economy recovery goes. But that\u0092s not something \u0085 that I think that should be the rate tomorrow.”<\/p>\n

After Friday’s employment numbers, Mr. Hoenig said he expects “modest but consistently improving” job growth in 2010 due to a “relatively systematic but modest recovery.” But with monetary policy already loose, he warned about trying to do more to spur job growth because “if you try and do more in a rush to get outcomes, you can sometimes do damage.”<\/p>\n

He added later, “You can create conditions that increase the risks of bubbles down the road. We\u0092ve learned that from history and so what you want to do is to be very mindful of that and not allow your policy to go on in a highly accommodative way too long so that you create the conditions for the next bubble. That\u0092s what you want to avoid and that\u0092s what we have the opportunity to avoid as we maximize our options for policy.”<\/p>\n

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Federal Reserve Bank of Kansas City President Thomas Hoenig became a voter on the Federal Open Market Committee last week, and right off the bat he became the first central banker in a year to dissent on policy. He wanted the Fed to remove language from its statement saying that rates would stay low for […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-283380","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/283380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=283380"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/283380\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=283380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=283380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=283380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}