Fed committed to growth push despite internal discord

Tue Sep 18, 2012 10:57pm EDT
 
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By Pedro Nicolaci da Costa

(Reuters) - A string of speeches from top Federal Reserve officials on Tuesday suggested the U.S. central bank is willing to be aggressive in its drive to beef up economic growth, yet also highlighted a small but vocal minority opposing fresh stimulus.

As Fed policymakers took to the podium following their announcement of an open-ended bond-buying program last week, William Dudley, the New York Federal Reserve Bank's influential president, said officials are committed to accelerating the pace of economic recovery.

The U.S. economy grew at just a 1.7 percent annual rate in the second quarter, not enough to put a dent in the nation's jobless rate, which stood at 8.1 percent last month.

"If you're trying to get a car moving that is stuck in the mud, you don't stop pushing the moment the wheels start turning - you keep pushing until the car is rolling and is clearly free," said Dudley, a former partner at Goldman Sachs.

Dudley, however, also emphasized that the policy was sufficiently flexible to accommodate any shift in the outlook.

"If the economy is weaker, we'll do more," he told a business group in Florham Park, New Jersey. "If the economy is stronger, and we see a substantial improvement in the outlook for the labor market sooner, we'll end up doing less."

Chicago Fed President Charles Evans, a forceful advocate for more monetary stimulus, said policymakers would likely decide at the end of the year to keep their asset purchases from dwindling when another program aimed at lowering long-term interest rates known as Operation Twist expires.

Following a two-day meeting, the Fed announced on Thursday that it would buy $40 billion in mortgage-backed securities per month and signaled a willingness to do more as needed until the outlook for employment improved significantly.   Continued...

 
A view shows the Federal Reserve building on the day it is scheduled to release minutes of the Federal Open Market Committee from August 1, 2012, in Washington August 22, 2012. REUTERS/Larry Downing