Federal Reserve Bank of Dallas President Richard Fisher, who has criticized the central bank’s bond buying program, said he wouldn’t rule out backing a tapering of purchases by March depending on economic conditions.
“It’s really a question of what the circumstances are at the time and how the financial markets, and most importantly, the real economy is doing,” Fisher, who is scheduled to vote on monetary policy next year, said in an interview with Bloomberg News in Sydney. “I would say in terms of my own support, that I wouldn’t rule out my supporting doing something before March. That’s me. I cannot speak for the members of the committee.”
The Fed decided at its meeting last week to press on with $85 billion in monthly bond purchases, saying it needs to see more evidence that the economy will continue to improve. Ben S. Bernanke is pushing unprecedented accommodation into the final months of his Fed chairmanship as he seeks to shield the four-year economic expansion from the impact of last month’s partial U.S. government shutdown.
“I did say publicly that I did not expect us, this is my personal view, that I would have a hard time personally supporting cutting back at this last meeting we had because there was so much uncertainty,” Fisher, 64, said today. “As we got to the meeting itself the picture was a little bit brighter than I expected, but still the data’s been skewed.”
President Barack Obama last month nominated Vice Chairman Janet Yellen to succeed Bernanke, whose term expires on Jan. 31, sending the U.S. dollar lower and stocks higher as markets bet she would pursue a dovish policy. If confirmed by the U.S. Senate, Yellen will take on the challenge of dialing down quantitative easing and withdrawing stimulus while maintaining growth.
“You have to think of her as the leader of the group, rather than voicing her own opinions,” he said of Yellen’s likely approach as Fed chairman. “I’m not saying you shift to being hawkish, I’m just saying that you can’t think of the individual anymore.”
Fisher said the nation’s housing market “is in full recovery” as the economy improves.
The Fed will delay the first cut to its bond-buying program until March, according to the median estimate of 40 economists in a Oct. 17-18 Bloomberg News survey. In a Sept. 18-19 survey, economists said the central bank would first reduce the purchases in December.
Fisher’s ties to Australia trace back to his father, who was born in the northeastern state of Queensland, and placed in a reformatory at age five, then an orphanage and foster homes, “one so cruel as to tie him by his ankle at night to an outdoor post,” he said in a 2012 speech. His father would later travel to South Africa, Mexico and China before settling in the U.S.
Fisher, born in Los Angeles, studied economics at Harvard, graduated with honors, went to Oxford University, earned an MBA from Stanford University and then worked at Brown Brothers Harriman & Co. He built his own investment firm in Dallas before becoming an ambassador and deputy minister of trade for the U.S. and, ultimately, president of the Fed Bank of Dallas.
“In one generation, a great shift occurred: from homeless to Harvard; from a brutal reformatory in Queensland to the great banking house of Brown Brothers Harriman in New York,” Fisher said in the July 9, 2012 speech.
Asked by an audience member after a speech in Sydney today whether he could envisage circumstances in which the bond-purchasing program was increased, rather than tapered, Fisher said he personally couldn’t see the balance sheet being expanded further than what is currently expected by the market.
“I think at the earliest possible moment we need to focus on transitioning back to having an interest rate-driven monetary policy,” he said.
“I can envisage us holding the base rate low for a very long time until we see an acceleration in the economy and especially in our case given our mandate on employment, as long as inflation stays in its current range, at less than 2 percent,” Fisher said.
In the speech, Fisher said fiscal discord has led to the U.S. government playing a suppressive role in the economy’s recovery.
“The excessively over-indebted U.S. government has, as mentioned, been hog tied -- prevented from providing stimulus. It has thus played a counter-cyclical, suppressive role,’’ he said. “The inability of our government to get its act together has countered the pro-cyclical role of the Federal Reserve.”