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Fed Policy May Fail to Achieve Full Employment, Roach Says

Jan. 26 (Bloomberg) -- The Federal Reserve’s efforts to spur the U.S. expansion may not be enough to achieve full employment, said Stephen Roach, non-executive chairman of Morgan Stanley Asia.

“It worries me,” Roach said today in an interview at the World Economic Forum in Davos, Switzerland, on “Bloomberg Surveillance” with Tom Keene. “It’s a model that’s designed to deal with economies in crisis,” though not with economies in the midst of an “anemic” recovery, he said. “Do we really have the recipe here to a fully employed U.S. economy? I don’t think we do.”

Chairman Ben S. Bernanke said yesterday the Fed is considering more asset purchases after extending its pledge to maintain low borrowing costs to at least late 2014.

The best way to spur demand in the world’s largest economy is to boost the amount of goods and services it exports to markets abroad, he said.

To contact the reporter on this story: Aki Ito in San Francisco at aito16@bloomberg.net

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

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