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Fed Presidents' Greatest Hits: Live!

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Jeff and Chuck, re-breaking old ground.

It was a banner day to hear the increasingly tired arguments for and against the Fed's stimulus policies from the horses' mouths in some of the U.S.'s more scenic locales.

First, to Alabama, where Atlanta Fed President Dennis Lockhart said things were going great.

The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.

Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.

Then, on to Grand Forks, N.D., were Minneapolis Fed President Narayana Kocherlakota fed a Chamber of Commerce the same lines he offered during the last stop on his tour, Edina, Minn.: The economy is still in the crapper and the Fed needs to be doing more about it.

"(M)y outlook implies that monetary policy is currently not accommodative enough," Kocherlakota said, forecasting unemployment, now at 7.7 percent, to fall only slowly to 7 percent by the end of 2014, and for inflation to continue to lag below the Fed's 2-percent target. "Monetary policy should be more accommodative."

But, for the main event for rehearsal of arguments you've already heard dozens of times was Virginia Commonwealth University, where Lockhart's and Kocherlakota's fellow dove, Chicago Fed chief Chuck Evans, traveled to enemy territory for a "debate" with Richmond Fed President/Ben Bernanke heartbreaker Jeff Lacker.

Mr. Lacker, the president of the Federal Reserve Bank of Richmond, said he did not expect the economy to recover the losses sustained during the recession. “It’s hard to talk about the economic outlook without being a little bit of a sourpuss,” he said during a panel discussion sponsored by Virginia Commonwealth University.

Mr. Evans, the president of the Chicago Fed, describing himself as “the happy guy in the room,” said the recovery had been postponed rather than canceled.

Mr. Lacker said he doubted monetary policy had more power to increase growth.

Mr. Evans said the Fed had an obligation to try because unemployment remained high.

Mr. Evans said the Fed would have sufficient warning of inflationary pressures to keep price increases under control. Mr. Lacker said he was worried the Fed was overconfident about its ability to manage the risk.

Both men emphasized that their views could prove to be wrong.

Fed's Lockhart Expects Bond Buying Through All of 2013 [WSJ Real Time Economics blog]
Fed may be able to pull back on stimulus this year-Lockhart [Reuters]
Fed's Kocherlakota repeats call for more policy easing [Reuters]
A Debate in the Open on the Fed [NYT]


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