(Reuters) - An ineffective, fractious and fiscally irresponsible government has slowed the U.S. recovery and counteracted the stimulative effects of Federal Reserve’s super-accommodative monetary policy, a top Fed official said on Monday.
“While the Fed has been moving at the speed of a boomer in full run, the federal government of the United States has at best exhibited the adaptive alacrity of a koala (without being anywhere near as cute),” Dallas Fed President Richard Fisher said in remarks prepared for delivery to the Australian Business Economists.
“Unlike in most recoveries, government has played a countercyclical, suppressive role,” Fisher said in Sydney. “The inability of our government to get its act together has countered the pro-cyclical policy of the Federal Reserve.”
The Fed is buying $85 billion in assets each month to spur growth and hiring by pushing down long-term borrowing costs. The program is the Fed’s third round of so-called quantitative easing, and last week it opted to extend its policy support after a series of soft readings on the economy.
Economists now think the Fed will wait until 2014 before starting to wind down asset purchases, although a clear pick-up in economic momentum could revive prospects for action at the Fed’s December 17-18 meeting.
Fisher opposes the Fed’s bond-buying program because he said he believes it can do little to boost the economy as long as lawmakers continue to bicker over the budget and fail to confront long-term fiscal imbalances.
He has also warned that keeping policy too easy for too long could seed future inflation.
Fisher will vote next year on the Fed’s policy-setting panel.
Writing by Ann Saphir; Editing by Steve Orlofsky