Fed’s Fisher Says Benefits and Costs of Asset Purchases Unclear

Federal Reserve Bank of Dallas President Richard Fisher said that both the ultimate benefits and costs of the central bank’s asset purchases are unclear.

“Companies are starting to use the copious cheap money they have access to for investing in capital projects and employing increasing amounts of workers,” Fisher said in the text of prepared remarks given today in El Paso, Texas. “But it is not yet clear that we will achieve a justifiable bang for the trillions of bucks the Fed has flooded the economy with.”

Several Fed officials said the central bank should begin slowing the pace of its asset purchasing program later this year and halt it entirely by year’s end, according to minutes of the March 19-20 Federal Open Market Committee meeting released today. The Fed at that gathering affirmed its plan to keep buying $85 billion per month in mortgage bonds and Treasuries.

“The Federal Reserve has provided plenty of, if not too much, high-octane fuel in the form of cheap and abundant money to propel the economy forward,” Fisher said at the University of Texas at El Paso.

Since U.S. central bankers met last month, a Labor Department report has shown that job growth sputtered to 88,000 in March from 268,000 in February. The Fed has said it will keep the quantitative easing program in place until the labor market substantially improves.

Fisher, who doesn’t vote on the FOMC this year, has been among the most vocal critics of additional monetary easing within the Fed.

To contact the reporter on this story: Aki Ito in El Paso, Texas at aito16@bloomberg.net

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

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