Olduvaiblog: Musings on the coming collapse

Home » Economic » Dudley Sees Fed Needs Better Grasp of How QE Works – Bloomberg

Dudley Sees Fed Needs Better Grasp of How QE Works – Bloomberg

Dudley Sees Fed Needs Better Grasp of How QE Works – Bloomberg.

Federal Reserve Bank ofNew York President William C. Dudley said the Fed needs to better understand how its bond buying provides stimulus to the economy.

“We don’t understand fully how large-scale asset purchase programs work to ease financial marketconditions,” Dudley said today in a speech in Philadelphia. “Is it the effect of the purchases on the portfolios of private investors, or alternatively is the major channel one of signaling?”

Dudley also said central bank economists confront a “riddle” on whether the decline in U.S. unemployment to 7 percent in November will reverse as more workers return to the labor force.

“The U.S. unemployment rate has declined more sharply than one might expect given the economy’s growth rate over the past few years,” Dudley said. “Is this permanent or will it reverse if the economy continues to grow and the pressure on labor market resources increases in the coming years?”

The Fed last month trimmed its monthly bond purchases to $75 billion from $85 billion, taking the first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s.

Dudley used his remarks to discuss how research at the regional bank helps the Fed understand the economy and address policy questions.

To contact the reporter on this story: Steve Matthews in Atlanta atsmatthews@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz atcwellisz@bloomberg.net

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 313 other followers

  • 70,288

Top Clicks

  • None