Richmond Fed President Jeffrey Lacker said in an interview with the WSJ that he does not believe economic conditions warrant further quantitative easing. He notes that there is little risk of deflation and that monetary policy has done all it can to support the economy. The only catalyst which would change his mind would be a decline in consumer prices. It seems that there may be a split forming within the Fed about what actions to take to spur economic growth. The doves (e.g. Yellen) want more money printing and the hawks (e.g. Hoenig) want a return to monetary sanity. Currently the doves have the upper hand under the leadership of helicopter Ben. From the WSJ:
"The economy is facing very real impediments to growth and there is little monetary policy can do about that," Mr. Lacker said in an interview with the Wall Street Journal late last week. "So I think our expectations for real growth and for the rate at which unemployment comes down ought to be very modest right now."WSJ: What is your threshold for more action by the central bank?
MR. LACKER: If inflation fell in a material way that suggested a risk of sustained declines in the price level, I would be willing to seriously consider further quantitative easing. But we seem fairly far from that threshold right now...For me if the growth numbers come in about where the consensus forecast is and we continue to get inflation between 1% and 2%, I don't believe I would see a need for further stimulus. Others may disagree but that's how I see it.