July 12 (Bloomberg) -- Federal Reserve Governor Elizabeth Duke said the central bank has no current plans to deploy additional tools for stimulating the economy.
The Fed could alter its communications strategy, lower the interest rate it pays on excess reserves or replace mortgage-backed securities that are rolling off its balance sheet, Duke said today in an interview with Bloomberg Television, when asked what tools the central bank has at its disposal.
“I would emphasize there are no plans to do that at this point,” she said.
“There are a lot of reserves out there in the system,” Duke said. “We don’t think the barrier is there’s not enough money out there.” She also said “I think we are in the right place” on monetary policy.
On the economy, Duke said, “we are seeing moderate growth, we are seeing subdued inflation.”
Reversing the drop in lending to small businesses will be difficult and time consuming because of “complex” challenges, including a decline in the value of collateral, she said earlier today in a speech at a Fed conference on small business lending.
Duke, 57, a former banker, said regulators can’t and shouldn’t urge banks to make loans that are too risky. The supply of credit may be limited by weaknesses in banks’ balance sheets, she said.
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