By Steven K. Beckner

FRANKFORT, Ky (MNI) – Richmond Federal Reserve Bank President
Jeffrey Lacker said Friday that there are no predetermined criteria for
a resumption of quantitative easing and said that, as far as he is
concerned, it would depend on the data at the time that the Fed’s
policymaking Federal Open Market Committee meets.

Lacker, who is not a voting member of the FOMC this year, declined
to say whether he would support providing additional monetary stimulus
but seemed to suggest that he would be hard to convince.

Lacker, talking to reporters following a luncheon address to the
Kentucky Economic Association, said he sees very little risk of
deflation and there are “fundamental” anti-growth forces or “headwinds”
at work which cannot be countered by monetary policy.

On Tuesday the FOMC left monetary policy unchanged, but said in a
statement that it “will continue to monitor the economic and financial
developments and is prepared to provide additional accommodation if
needed to support the economic recovery and return inflation, over time,
to levels consistent with its mandate.”

Asked by Market News InternationalI under what circumstances he
would support a return to quantitative easing, Lacker responded, “We
never lay down criteria in advance.”

“It will just depend on what the data look like the day of the
meeting,” he said, including “my assessment of inflation and growth.”

“We’ll see how data unfold before we decide on further action,” he
said in response to another reporter’s question.

Asked by MNI whether tax and regulatory uncertainties are such that
further monetary policy would be rendered ineffective, Lacker responded,
“I think that the fundamental factors that are inhibiting growth right
now probably are beyond our ability to offset.”

What’s more, Lacker suggested there is no real deflation or
excessive disinflation threat that the FOMC needs to combat.

“I don’t see the risk of an outbreak of deflation as very high at
all,” he said, and he added, “I think the record from 50s 60s shows that
it’s quite possible for inflation to run under 1 1/2% — between 1 and 1
1/2% — for some time without us spiraling into deflation.”

As for economic growth, Lacker said “we need to be modest in our
expectations for growth” because “the economy is facing real headwinds
that are fundamental.”

But he made clear he does not expect a “double dip” recession,
saying he “line(s) up pretty well with the Blue Chip consensus” forecast
of 2% second half growth accelerating to 3% or more growth next year.

He was less upbeat about jobs, saying “unemployment is likely to
decline only slowly in the year ahead.”

The Kentucky native spoke after being made a Kentucky Colonel by
the governor and receiving the Kentucky Distinguished Economist award.

** Market News International **

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