Former Massachusetts Governor Mitt Romney said the Federal Reserve should refrain from a third round of large-scale asset purchases.
Romney, the presumptive Republican nominee for president, said that while the first round of bond buying by the U.S. central bank may have had a positive effect, a new round of quantitative easing will not help the economy.
“I am sure the Fed is watching and will try to encourage the economy,” Romney said in an interview broadcast on CNN’s “State of the Union” program. “But I don’t think a massive new QE3 will help the economy.”
The Fed last week moved a step closer to pumping more stimulus into an economy plagued by weakening growth and a jobless rate that has stayed at 8 percent or higher for more than three years. The Federal Open Market Committee on Aug. 1 said it will “closely monitor” economic data and financial developments, suggesting it is focused on the economy’s near-term performance.
The Fed combatted the financial crisis through two rounds of quantitative easing. In the first round starting in 2008, the Fed bought $1.25 trillion of mortgage-backed securities, $175 billion of federal agency debt and $300 billion of Treasuries. In the second round, announced in November 2010, the Fed bought $600 billion of Treasuries.
The FOMC “will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said in a statement last week at the end of a two-day meeting in Washington.
Representative Debbie Wasserman Schultz, a Florida Democrat and head of the Democratic National Committee, said it is “up to the Federal Reserve” to decide whether to commence a new round of asset purchases.
“The Federal Reserve is an independent financial institution,” Wasserman Schultz said in an interview on ABC’s “This Week” program. “It’s important that we not dictate from the White House, or certainly from candidates for president of the United States, what the Federal Reserve should be doing.”