Federal Reserve Bank of Dallas President Richard Fisher said monetary policy alone can’t create enough jobs to sustain the economy and that more stimulus from the Fed sends the wrong signals to fiscal policy makers.
“Monetary policy is one thing but it’s a very limited tool,” Fisher said today in Los Angeles at a conference sponsored by the Milken Institute. He also said the central bank has disrupted pricing in the bond market in its program of selling short-term securities for the purchase of long-term debt.
The Fed’s program to extend the average duration of its balance sheet, known as Operation Twist, is allowing the government to borrow money at a lower cost, he said as part of a panel discussion.
“By providing monetary accommodation, we’re saying, in essence, Congress, you better eat your vegetables, or we’ll serve you a big plate of monetary cookies,” said Fisher, who doesn’t vote on monetary policy this year.