Posted on 08/15/2011 11:45:12 AM PDT by xzins
FLORENCE, Alabama | FLORENCE, Alabama (Reuters) - The risk of a new U.S. recession has risen over the last couple of months, but an outright contraction will most likely be avoided, Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday.
Lockhart said there is plenty the central bank could do if the economy does deteriorate further, including ramping up asset purchases or shifting their composition.
Recent market volatility, driven in part by concerns of slowing economies both in the United States and Europe, threatens consumer confidence and could put a crimp on spending, Lockhart told a Rotary Club meeting.
"The events of the last several weeks are a reminder that circumstances can quickly arise that may call for additional monetary stimulus," Lockhart said.
Last week, the Fed took the unprecedented step of promising to keep interest rates near zero for at least another two years. Lockhart said in his view, the pledge hinged on economic conditions, and could be altered as the economic winds shift.
Even though the Fed had only made a verbal promise about rates themselves, its balance sheet policy "should align with explicit rates policy," he said.
Delving into the reasons for "wild" recent swings in global financial markets, Lockhart said the ups-and-downs were in part a reaction to the downgrade of the U.S. AAA credit rating.
He said worries about Europe have also been at the forefront, with investors fearing France's ratings could be next on the chopping bloc.
"There have been escalating concerns about the condition of specific banks in Europe that have high exposure to Italy and other peripheral countries," Lockhart said.
Still, he was relatively sanguine about the U.S. financial system.
(Excerpt) Read more at reuters.com ...
I have always thought that the primary mission of the Fed should be to protect the value of the dollar. When it tries to ‘help the economy’, we invariably get into more trouble.
I understood that the market improved last week because the Fed pledged no increase in interest rates until 2013. Here is a member of the Fed saying now that the pledge is fungible. They’ll change their minds based on the economy.
There’s a promise you can hang your hat on. /s
Between 9 and 20% unemployment, God knows how much under employment wage wise, and this guy warns of a second recession, when we’ve been in a depression for several years.
The public should be beginning to understand why there is no recovery.
This administration and it’s fellow travelers are absolutely clueless.
Where do you think those 20 million people’s votes are going to go? Obama? LMAO
This may not be a recession to Obama and company, but it’s a deep depression for the upwards of 20% who are unemployed, and the unknown percentage of people on top of that who are under-employed.
Obama is killing himself by refusing to address the current economy for what it actually is.
More than 20% of the workforce knows this bastard is screwing them.
November 2012 looms large, and this assbite is thumbing his nose at the people who have been financially destroyed by this economy.
And people think Bachmann can’t beat this guy? LMAO
In what alternate universe would that be?
Oh I agree. Why if the public unemployment figure drops to 8.8%, they can call this the summer of recovery after all, and increase the interest rates due to the threat of an overheated economy.
People shouldn’t trust a single word out of this administration or it’s minions.
I wonder how they counted unemployment in FDR’s first term. That would give a measure of “depression”, wouldn’t it?
Lockhart said the ups-and-downs were in part a reaction to the downgrade of the U.S. AAA credit rating.The markets are directly or indirectly married to the price of crude, just like nearly everything else.
I suppose it would. I don’t believe they had unemployment compensation back then, but I could be wrong.
I’m sure the Left would distort anything that even came close to proving this buffoon was inept or dishonest too.
Wow, that Lockhart is a real Captain Obvious
The recession risk part is obvious.
He carefully talked around the interest pledge.
No, they're not my friend. What they're doing is quite intentional.
They will stimulate our monetary value right into the abyss.
And there is NO inflation, dontchaknow!
Absolutely. /s
I believe the feds stated charge is to “maximize employment and control inflation.” Somebody chime in if I am wrong.
This may be true, but it is my opinion that it is impossible to do both simultaneously. Maximizing employment through monetary policy leads to inflation, which, in the long run, more harmful than just letting the natural business cycles run their course.
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