Kansas City fed reserve president George’s comments are hitting the wires:

  • US employment picture getting better
  • Housing recovery gaining momentum
  • Fiscal policy producing headwind to US economy but he expects the impact to be felt mainly in 2nd and 3rd quarters this year and then fade
  • Expects US growth to continue around 2% this year
  • Yet to see any obvious impact on real economy from higher equity prices, may take some time
  • Hopes that there will be an opportunity to reduce the level of Fed bond buying going forward
  • Fed will face a challenge in communicating its exit in fashion that does not produce sharp increaes in market rates
  • Must look carefully at capital levels in large banks, dont wait for next crisis to tackle this issue

Esther George is a voting member of the FOMC.