The US will make little progress tackling high unemployment before 2014 unless the Federal Reserve eases policy further, one of the central bank’s leading officials has warned in the run-up to a meeting next week where the option of QE3 will be on the table.
The comments by John Williams, president of the Federal Reserve Bank of San Francisco, show how the weak economy is pushing the central bank towards action to support growth.
In an interview with the Financial Times, he forecast that unless “further action” was taken, there would be a lack of progress in boosting the job market – where the unemployment rate has been stuck around 8.2 per cent since the start of the year – over the next 18 months. But he declined to call directly for a Fed move. “I think the argument against further action is the question of uncertainty around the effects, the costs and the benefits of doing so,” he said.