Fed’s Lacker Says Bond Buying Wouldn’t Stimulate Growth

Federal Reserve Bank of Richmond President Jeffrey Lacker said additional Fed purchases of bonds known as quantitative easing wouldn’t spur the U.S. expansion, which is hindered by concerns such as fiscal policy.

“Monetary policy doesn’t have a lot of capability right now for really enhancing the growth we are seeing on the economy,” Lacker said in a Fox Business Network interview posted online today. “The impediments to growth are things that monetary policy is not that capable of offsetting.”

The Richmond Fed leader said additional bond purchases are not “a forgone conclusion. We take everything a meeting at a time. It is going to depend on how the data comes out.”

While growth has weakened in recent months, there has been a pattern of moving from strong to weak growth in the three-year recovery, he said.

Central bank officials on June 20 downgraded their forecasts for growth and employment while noting “significant downside risks” to the economy. Lacker dissented last week from the Fed’s $267 billion extension of its Operation Twist program, believing it would spur inflation and not significantly help the economy.

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net

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