New York, NY, United States (4E) – Dallas Federal Reserve President Richard Fisher said the central bank needs to keep its strategy of gradually scaling back its bond purchases despite the severe winter weather that has slowed down the U.S. economy.
Mr. Fisher downplayed recent indicators that the economy growth was losing momentum during the Dallas Fed president’s interview with Bloomberg Radio. Among the latest data was a 0.3 percent fall in industrial production last month, the first contraction since July.
The Dallas Fed president is a voting member of the central bank’s policy making committee in 2014, and is considered among the most hawkish of central bankers in the country.
Fed Chairperson Janet Yellen said this week that she will continue the policies of her predecessor of reducing stimulus in “measured steps,” and suggested that an extreme event is needed for that plan to be altered. In her testimony before Congress, Ms. Yellen said that a “notable change in the outlook” for the economy would be the only way for policy makers to change the Fed’s current pace of $65bn in monthly bond purchases.
The Fed has reduce its monthly bond buying, also known as quantitative easing or QE, by $10bn at its previous two meetings, which brought the total monthly purchases down to $65bn.
Mr. Fisher said central bank officials need to decide on changing the forward guidance on the timing for raising the benchmark interest rate. He said the Fed needs to discuss further about how to refine that language.