Factbox: Hawks,Doves fight it out as Fed moves toward easing

WASHINGTON (BestGrowthStock) – Federal Reserve Chairman Ben Bernanke said on October 15 that a case could be made for a further easing in U.S. monetary policy.

A consensus appears to be in place at the Fed in favor of a second round of purchases of U.S. government debt to stimulate the economy, with a number of officials firming their support or showing more openness toward easing in recent weeks.

Following is a rating of where policy makers stand on a scale of 1 to 5, with 1 signifying “doves” most likely to support further easing and 5 representing “hawks” most likely to oppose it.


Evans has been outspoken in supporting Fed action to support the recovery.

“The magnitude of resource slack, combined with the fact that inflation has been running below the level I consider consistent with long-term price stability, suggests to me that it would be desirable to increase monetary policy accommodation,” Evans said on October 19.

Evans has also suggested the Fed announce it will seek a higher level of inflation than is normally desirable — a controversial approach called price-level targeting — to drive down real interest rates and restore growth.


Dudley said on October 1 that further easing would be necessary unless there is clear evidence the recovery has gained traction. His position in favor of easing appears to have hardened since then.

“Viewed through the lens of the Federal Reserve’s dual mandate — the pursuit of the highest level of employment consistent with price stability, the current situation is wholly unsatisfactory,” he said on October 19.

Dudley has also backed price-level targeting as a promising approach that could help stimulate growth.


Rosengren has said he believes the U.S. recovery has lost momentum and he thinks it is time for the Fed to resume stimulus efforts to limit the risk of an economy-sapping, broad-based decline in prices.

“Insuring against the risk of deflation may be much cheaper than waiting until it has occurred and then trying to address it,” Rosengren said on October 16.

The Boston Fed chief has also recommended an aggressive response, rather than a gradual stimulus effort.

1 — FED GOVERNOR DANIEL TARULLO (permanent voter)

Tarullo, an appointee of President Barack Obama, focuses on bank supervision and does not speak frequently about the outlook for the economy or policy. He has, however, been supportive of quantitative easing and analysts expect he would back a further round of support.

“The relatively modest pace of recovery, the continued high rate of unemployment, subdued inflation trends, and well-anchored inflation expectations together suggest that the need for highly accommodative monetary policies will not diminish soon,” Tarullo said on April 8.

1 — FED VICE CHAIR JANET YELLEN (permanent voter)

Yellen was firmly in the pro-easing camp when she was president of the San Francisco Federal Reserve Bank and Obama tapped her to be vice chair of the Board of Governors.

“With unemployment still painfully high, job creation must be a high priority of monetary policy,” she said on July 15.

In her only speech after being becoming Fed No. 2, she adopted a more centrist tone as she argued that low rates risk feeding asset price bubbles. However, analysts believe she could a forceful behind-the-scenes advocate of further easing.

1 — FED GOVERNOR SARAH RASKIN (permanent voter)

The views of Raskin, a recent Obama appointee, on monetary policy are not well known. However, in her confirmation hearing she called for a renewed focus on the full employment side of the Fed’s dual mandate, suggesting she will embrace further easing measures.

2 — FED CHAIRMAN BEN BERNANKE (permanent voter)

Bernanke’s view will carry the day at the Fed and most other policy-makers will fall in line behind him. Bernanke has been careful to say there are risks as well as benefits from more easing, but has in recent weeks signaled firmer support.

“There would appear — all else being equal — to be a case for further action,” he said on October 15.


Lockhart in recent weeks reluctantly has come around to the view that the economy is weak enough to warrant further monetary easing from the Fed.

He has been the most explicit among policy-makers in discussing the scope of further stimulus, saying it must be big enough to have a significant impact.

“If we’re going to pursue another round of quantitative easing, it has to be a large enough number to make a difference,” Lockhart said in an interview on CNBC on October 19.

“As a monthly number ($100 billion) is fairly consistent with what we did before, and so I think it would certainly be in the range of numbers one might consider … but if you were talking about $100 billion as simply the overall program, I think that’s too small,” he said.


Analysts view Pianalto as a centrist. She said on September 30 that growth was too slow to significantly reduce high unemployment and inflation was too low.

Pianalto also said she was studying whether more stimulus would be effective.


Bullard on July 29 warned the United States could fall into a Japan-style quagmire of falling prices.

He has been a proponent of using quantitative easing as a monetary policy tool. However, on October 8 he said that while the economy has slowed, it hasn’t slowed so much as to make the case for further easing an obvious one.

4 — FED GOVERNOR KEVIN WARSH (permanent voter)

Warsh had been closely linked to centrist views on risks to the recovery but last fall showed some hawkish feathers by suggesting the Fed may have to tighten policy aggressively before clear signs emerge of an entrenched economic upturn.

Analysts believe he is uncomfortable with more easing, however he is likely to put any personal qualms aside in favor of supporting Bernanke.

4 — FED GOVERNOR ELIZABETH DUKE (permanent voter)

In public remarks, Duke tends to focus more on regulatory issues than on the broader economy, making her monetary leanings somewhat of a question mark.

However, the Wall Street Journal report that she expressed reservations about the Fed’s August 10 decision to reinvest proceeds from maturing mortgage-backed securities the central bank holds into government bonds, a move that was seen as holding the door open to further easing.

A Bush appointee, Duke said on July 12 that she did not think the economy would fall back into recession, and it was in a moderate recovery.

She too is likely to put any reservations on the back burner and support Bernanke if he decides easing is needed.

Factbox: Hawks,Doves fight it out as Fed moves toward easing