Federal Reserve Chairman Ben Bernanke has laid the groundwork for further monetary policy easing, but will the voting members of the FOMC support this policy? Here are the voting members of the FOMC and their likelihood to support easing (the doves) or oppose it (the hawks).
Evans is among the Fed's most aggressive doves, calling for the Fed to keep interest rates near zero until the jobless rate falls below 7 percent, as long as inflation does not rise above 3 percent. If that does not work fast enough, Evans said on Oct. 17, the Fed should go back to buying bonds to drive down borrowing costs. "Given how badly we are doing on our employment mandate, we need to be willing to take a risk on inflation going modestly higher in the short run if that is a consequence of policies aimed at lowering unemployment," he said.
A key Bernanke ally, Dudley suggested in October the Fed could do more to help the housing sector, and the economy more broadly, with further bond purchases. "Clearly we've indicated our interest in supporting the housing market in keeping mortgage rate spreads, and spreads between mortgage rates and Treasury yields, from getting too elevated," Dudley said on Oct. 24. "Depending on how the world evolves, we potentially could move to do more in that direction."
In his first speech on the economic outlook since his appointment in 2009 by President Barack Obama, Tarullo argued more should be done to help the country's jobless crisis. "I believe we should move back up toward the top of the list of options the large-scale purchase of additional mortgage-backed securities," Tarullo said on Oct. 20. "There is need, and ample room, for additional measures to increase aggregate demand in the near to medium term, particularly in light of the limited upside risks to inflation over the medium term."
As the second-in-command on the Fed's policy-setting panel, Yellen is also one of its most dovish members. "We are prepared to employ our tools as appropriate to foster a stronger economic recovery in a context of price stability," she said on Oct 21. Yellen said that the possibility that Europe's financial crisis could force banks to tighten credit was a top risk for the United States: "The potential for such adverse financial developments to derail the recovery creates, in my view, significant downside risks to the outlook."
Under Bernanke's leadership, the Fed's policy-setting Federal Open Market Committee launched two fresh rounds of monetary easing this year, signaling in August that it is likely to hold short-term interest rates near zero through mid-2013, and in September announcing a $400 billion program to reweight its balance sheet with longer-term securities. "The (Fed) continues to explore ways to further increase transparency about its forecasts and plans," Bernanke said on Oct. 18.
Duke stood with Bernanke and the majority of the Fed's policy-setting panel on all recent decisions to ease policy. She has expressed concerns about the housing sector, saying on Sept 1 that the housing market is "so severely out of balance" that it is hampering the economic recovery.
Raskin, an Obama appointee, supported the Fed's recent moves to ease policy, and on September 26 said it would be wrong to conclude from the muted effect of aggressive Fed policies so far that central bank actions are useless. "The opposite conclusion might well be the case--namely, that additional policy accommodation is warranted under present circumstances." Still, she said, she would be "quite leery" of one approach to easing floated by colleagues: allowing inflation to rise above the Fed's 2 percent target. "Keeping inflationary expectations anchored is in my mind extremely important," she said.
One of three policymakers to dissent this year on the Fed's moves to ease policy, Kocherlakota has argued that economic conditions have improved since the last time the Fed decided to buy bonds, and therefore the Fed should be tightening policy, not easing it. On Oct. 21 he said that the Fed's actions suggested the central bank had become more tolerant of inflation, and called for more clarity on its goals.
A self-described inflation hawk, Fisher has lately been more focused on the problem of high unemployment than on rising prices, agreeing with dovish colleagues like New York Fed's Dudley that inflation is not a threat at the moment. But Fisher has also been an outspoken opponent of further monetary easing, saying the Fed has done its part and any further help to the economy must come from the fiscal authorities. "We don't have to act at every meeting," he said on Oct. 24.
An outspoken inflation hawk and skeptic on the effectiveness of Fed bond purchases, Plosser dissented on the Fed's recent easing moves. "We should not take certain actions simply because we can," Plosser said on Sept. 29. "The ills we currently face are not readily resolved through ever more accommodative monetary policy."