Romney: Federal Reserve Should not Enact New Measures to Boost the Economy
During an interview with CNN’s Gloria Borger yesterday, Mitt Romney said that the Federal Reserve should not enact a new round of stimulus aimed at boosting the still-sluggish economy, even as he admitted that the Fed’s first round of so-called “quantitative easing” did some good:
BORGER: Should — should the Fed intervene at some point?
ROMNEY: Well, I think the Fed’s first action, in quantitative easing, was effective to a certain degree. But I believe that the QE2, the second round of easing — I don’t think it had the impact that they were hoping for. And I’m sure the Fed is watching, will try and encourage the economy. But I don’t think a massive new QE3 is going to help this economy.
The Fed itself announced last week that, though it “anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate,” no new action will be taken. This is consistent with the Fed’s actions over the last few years, when it has tolerated high unemployment, even as inflation, the other half of the Fed’s mandate, has stayed low:
Federal Reserve Chairman Ben Bernanke said in a speech today that, “even though some key aggregate metrics — including consumer spending, disposable income, household net worth, and debt service payments–have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and financial conditions.” But still, the Fed is standing pat.
As ThinkProgress’ Jeff Spross detailed, Republicans have warned that the Fed’s actions would spark inflation, which has never actually materialized. Romney now seems to be jumping on board with a similar message, saying that the Fed should not take all available steps to bring down the jobless rate.