CHICAGO (MNI) – Federal Reserve Gov. Kevin Warsh took a cautiously
upbeat view of the U.S. economy on Thursday, saying that “although it’s
not going to be easy,” there is a real opportunity for growth in 2011.
Speaking on a panel addressing the future of financial markets
sponsored by the Executives’ Club of Chicago, Warsh said the economy has
shown “incredible resiliency” amid the serious challenges of the last
couple of years, adding that the U.S. has maintained the most liquid
capital markets in the world. “I don’t think I would want to swap” with
any other economy in the world right now, he said.
Warsh was less sanguine about international conditions, saying the
global economy “is not working in synchronized way right now.”I
The Fed governor said that there has been “plenty of debate” from a
number of corners about the Federal Reserve’s move to buy long-term
Treasuries, in a policy move known as QE2, but said we “shouldn’t let
monetary policy be politicized.”
“The independence of a central bank” is critical, Warsh added.
Asked about his recent Op-Ed piece in the Wall Street Journal,
Warsh chose not to address his skepticism expressed about QE2, instead
noting the savings rate is up and consumers remain cautious, but said
“that’s not something that policymakers should address” right now.
Consumers are going to create their own normal, he said. Warsh
added that while he has seen “modest improvement in terms of job
creation over the last few months, it’s not my place to say the
unemployment rate is going to shoot way down.”
Asked by a member of the audience about an expanded role of the
Federal Reserve, Warsh reiterated that “price stability” is the Fed’s
primary objective, and a mandate that policymakers “take exceptional
seriously.” However, he acknowedged is a movement underway in Congress
to “open up the statutes” and look at other responsibilities that might
fall to the Fed.
** Market News International Chicago **
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