Has the U.S. done all it can to fix the economy?
At the Central Bank of Chile’s Fourth Summit Meeting of Central Banks on Inflation Targeting Santiago, Chile, John Williams, president of the San Francisco Federal Reserve, opined that monetary policies set by the Federal Reserve cannot contribute to the economy unless it is combined with prudent fiscal policies.
“Fiscal policy actions that reduce uncertainty and stimulate recovery are badly needed,” he said.
Williams said he expects the unemployment rate to remain above seven percent for at least three more years and won’t hit five to six percent (what the Fed considers full employment) until 2016.
The Fed reduced rates to roughly zero percent in 2008 and has bought $2.3 trillion in bonds to keep the economy afloat, and says they’re in no hurry to raise the rates. Williams said housing remains critical and calls for more government programs to help reduce delinquencies, foreclosures and underwater borrowers.
“Bold and decisive actions succeeded in forestalling economic disaster. But they have not been enough to deliver a robust recovery,” he said.