Dallas Fed President: high oil prices won’t spur a double-dip recession
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STEVE CHIOTAKIS: The Federal Reserve’s latest regional survey of the American economy shows things are starting to rev up a bit. But inflation remains a concern, with costs on the rise for manufacturers and retailers. And increasingly — for you and me. Like with oil and gas prices going through the roof lately, as we’ve talked about.
Richard Fisher is president of the Federal Reserve in Dallas. He’s one of the few people in this country who has a say into the Fed’s all-important monetary policy. And he’s with us now to talk about how the central bank fits into the economic equation. Good morning.
RICHARD FISHER: Good morning. How are you?
CHIOTAKIS: I’m doing well. You weren’t in favor of the Fed’s bond buying program because you thought we were not in danger of a double dip recession. What about now with these oil prices? Does that change the calculations do you think?
FISHER: Well, that’s a shock to the system, but that the same time, we are seeing pretty good growth. And we’ll have to see whether this is a temporary phenomenon or a longer term phenomenon. But I don’t think the risk of a double dip recession has raised it’s ugly head here. I think it is receded significantly.
CHIOTAKIS: So the Fed Board’s going to take up this bond buying program again this summer when the current program expires in June. How do you think that’s going to play out?
FISHER: I did not support the program. I do expect that program to run its course. I cannot personally foresee the circumstances — barring some external shock that I’m not aware of — where we could justify further monetary accommodation. I have said that I look at this as a bridge loan to the fiscal authorities to get their act together. Nobody could argue that there isn’t sufficient liquidity — that is money in the economy — for corporations to put to work, to hire the American people. What is missing is the incentive to do so and that has to come from the fiscal and regulatory authorities and that’s the Congress.
CHIOTAKIS: Fed Chairmen Ben Bernanke testified this week before Congress that the recovery is self sustaining. Your thoughts on that?
FISHER: Yes, I think it is sustaining right now because in the fourth quarter of last year we saw domestic consumption pick up substantially. That’s very very important. The gears are meshing now. They may not be moving as fast as we would like, but I just read last night, Churchill was in the United States on the day of the crash in 1929.
FISHER: As he watched how we were digesting all that crisis, he noted in his little book that this was America at its most magnificent and its most tormented. I kind of feel that on our fiscal policy side, we’re both at our most magnificent and at our most tormented, so it’ll be interesting to watch how these elected officials work their way through these difficult issues.
CHIOTAKIS: Richard Fisher, president of the Dallas Federal Reserve. Thank you so much sir.
FISHER: Thank you very much.
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