Robert Samuelson column: Dissent at the Fed

Robert Samuelson column: Dissent at the Fed

Eric S. Rosengren, president and CEO of the Federal Reserve Bank of Boston, opposed the recent interest rate cuts, contending the additional stimulus was not needed. The Associated Press The battle to control the Federal Reserve is being waged on many fronts. There’s President Trump’s relentless tirades against Fed Chairman Jerome Powell — and Powell’s low-key rejoinders. There’s the clamor from investors (aka Wall Street) for easy credit to prop up stock prices. Some economists favor cheap credit to sustain low unemployment (3.7%). What’s been missing is a cogent challenge to the reigning consensus, which is this: Unless the Fed acts forcefully, the economy could fall into a recession. In a recent speech at New York University (NYU), Eric S. Rosengren, president of the Federal Reserve Bank of Boston, gave a detailed criticism of Fed policy. At its last two meetings, the Federal Open Market Committee (FOMC) — the Fed’s main decision-making body — has cut interest rates a quarter point. Rosengren, along with Esther George of the Kansas City Federal Reserve Bank, dissented in both cases. (Dissenting in the other direction — favoring easier credit — was James Bullard, president of the St. Louis Federal Reserve Bank.) This is significant. The political culture of the Fed emphasizes deference to the Fed chair and unanimity in most of its decisions. When dissents do occur, they usually reflect a fundamental disagreement. That is surely the case now. To understand why, it helps to know a little “Fed-speak,” the technical jargon […]

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