BEIJING (MNI) – Former U.S. Federal Reserve Governor Paul Volcker
noted global concerns about the decision to introduce a fresh
quantitative easing program, but insisted that a government has to take
action to support its economy.
Volcker, who is currently chairman of the White House’s Economic
Recovery Advisory Board, said that sluggish growth and high unemployment
has caused great “frustrations” within the U.S. leading the Fed to take
this “extraordinary action” of quantitative easing.
He noted the concerns about excess liquidity and asset bubbles
caused by the Fed’s actions, but said that the U.S. would need some time
to adjust to the “dislocation of the American economy.”
“A government will do what it will do to help this adjustment. It
explains why the Fed took this extraordinary action,” he said.
He also added that while global imbalances cannot be corrected by
yuan appreciation alone, some “sense of progress” is needed on Chinese
economic reform.
There is currently no evidence of inflationary pressure in the
U.S., Volcker said, but the main goal for U.S. monetary policy is to
maintain price stability.
“If I was outside the U.S. and concerned about the world monetary
system and economy the importance of maintaining a sense of confidence
in the American system is important,” he said.
Chinese officials continued to criticize last week’s easing
decision Tuesday.
Cheng Siwei, Vice-Chairman of the Standing Committee for the
National People’s Congress, said shortly before Volcker’s remarks here
that the extra $600 billion pumped into the U.S. economy would cause a
rush of inflows to other countries.
beijing@marketnews.com
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