Fed's Hoeing Says He's "Alone", But That Doesn't Mean He's "Not Right"
Kansas City Federal Reserve Bank President Thomas Hoeing sat down with the FOX Business Network on Wednesday to discuss being the lone dissenter on the Fed's zero interest rates.
"I may be alone, but that doesn't mean I'm not right. It just means I'm alone."
Hoeing believes that the Fed needs to consider raising short-term interest rates, or at the very least stop pumping up the market by using language like saying rates will remain at the current levels for an "extended period."
He wants the fed to stop guaranteeing the low rates and start to change the language to prepare the markets for when the rate rise does occur.
"I'm looking down the road, further ahead. Monetary policy isn't just about today, it's about the future. We are at nearly zero interest rates; that's not sustainable over a long period of time without causing other distortions in the economy. Even if we were to raise interest rates now to one percent or two percent, that’s a very accommodated rate. And to get to that level, would take several quarters."
Hoeing warns that if the rates stay at the current levels it could trigger inflation, but he warned that any increase in the short-term interest rates needs to happen over an extended period time so the markets do not go into shock.
When the Federal Open Market Committee released its latest statement earlier this month to cover interest rates, Hoeing was the only dissenting vote against the interest rates remaining low.
"My point was to not provide the market with the kind of guarantees, or what I call guarantees, that we will keep the rate at zero to let the market begin to adjust to know that things can change so you don’t shock the market at a later date."
"I may be alone, but that doesn't mean I'm not right. It just means I'm alone."
Hoeing believes that the Fed needs to consider raising short-term interest rates, or at the very least stop pumping up the market by using language like saying rates will remain at the current levels for an "extended period."
He wants the fed to stop guaranteeing the low rates and start to change the language to prepare the markets for when the rate rise does occur.
"I'm looking down the road, further ahead. Monetary policy isn't just about today, it's about the future. We are at nearly zero interest rates; that's not sustainable over a long period of time without causing other distortions in the economy. Even if we were to raise interest rates now to one percent or two percent, that’s a very accommodated rate. And to get to that level, would take several quarters."
Hoeing warns that if the rates stay at the current levels it could trigger inflation, but he warned that any increase in the short-term interest rates needs to happen over an extended period time so the markets do not go into shock.
When the Federal Open Market Committee released its latest statement earlier this month to cover interest rates, Hoeing was the only dissenting vote against the interest rates remaining low.
"My point was to not provide the market with the kind of guarantees, or what I call guarantees, that we will keep the rate at zero to let the market begin to adjust to know that things can change so you don’t shock the market at a later date."
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