Evans Says Fed Needs To Mimic Below-Zero Rates

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	Evans Says Fed Needs To Mimic Below-Zero Rates

Forbes Markets

1-4-2009 7:43 AM

596 views

tags:

federal reserve, monetary policy, u.s. economy

Forbes Markets says:

One 'quantitative measure' would be for the Fed to buy large quantities of assets from banks, say, mortgage backed securities.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/48a31623-b5e7-4009-894e-edd5cd0e36a3/C2A39887-FE6D-4A45-9CC5-31FD453C1821/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.reuters.com/article/ousiv/idUSTRE5021V320090104" href="http://www.reuters.com/article/ousiv/idUSTRE5021V320090104" style="font-size: 11px;">www.reuters.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.reuters.com/article/ousiv/idUSTRE5021V320090104"><P>A grim economic outlook highlights the need for the Federal Reserve to step up quantitative measures to boost growth, with official interest rates already effectively at zero, Charles Evans, president of the Chicago Fed, said on Saturday.</P><SPAN id="midArticle_1"></SPAN>
<P>Evans said that based on the outlook for rising unemployment, falling industrial production and a wider output gap, economic models suggest rates should be below zero.</P><SPAN id="midArticle_2"></SPAN>
<P>"If it were not constrained by zero, those models would want to push it below zero, but that's not possible," Evans told reporters after a panel at the American Economic Association's meeting in San Francisco.</P><SPAN id="midArticle_3"></SPAN>
<P>Quantitative easing, a way to flood the banking system with large amounts of money, "is a way to mimic below-zero rates and provide support to the economy," he said.</P></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/C2A39887-FE6D-4A45-9CC5-31FD453C1821/blog/" title="blog or email this clip"><img src="http://content9.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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