Atlanta Fed's Lockhart: Policy Actions Should Be Viewed in Total
The Federal Reserve's latest measures aimed at lowering long-term interest rates and supporting mortgage markets are likely to have a modest positive impact, Federal Reserve Bank of Atlanta President Dennis Lockhart said in a Sept. 27 speech. Lockhart emphasized that the recently unveiled program is not a stand-alone measure. Rather, he said this move should be seen as augmenting a broader strategy to promote economic recovery and facilitate necessary adjustment.
Reshaping the Fed's balance sheet
"In my view, the maturity extension program along with the MBS purchases represents a measured incremental attempt to add more support to the recovery," Lockhart told the World Affairs Council of Jacksonville, Fla. "It's not a fix for everything that ails the economy, but it should help."
Addressing policy impediments
Other elements of the Fed's strategy include earlier large-scale asset purchases, a conditional commitment to keep the federal funds rate between 0 percent and 0.25 percent at least through mid-2013, and maintaining the total size of the Fed's balance sheet.
"The power and sufficiency of these efforts should not be evaluated individually," Lockhart said, "but as a cumulative total policy of support and accommodation."
October 6, 2011