November 12, 2010 / 11:05 PM / 7 years ago

Factbox: Doves gain upper hand over hawks at Fed

(Reuters) - Federal Reserve Chairman Ben Bernanke led the U.S. central bank last week to a consensus in favor of buying $600 billion of U.S. government debt to stimulate the economy.

But he appeared to come to that decision with some hesitation, as he carefully weighed both the benefits and risks of the policy shift.

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


Evans has been outspoken in supporting further Fed easing.

“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 advocated that the Fed temporarily target 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.


Before the Fed’s November 3 decision, Dudley repeatedly said further easing would be necessary unless there was clear evidence the recovery was gaining traction.

“The Fed cannot wave a magic wand and make the problems remaining from the preceding period of excess vanish immediately,” Dudley said on October 25. “But we can provide essential support for the needed adjustments.

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


Rosengren advocated for aggressive Fed action in the face of a flagging recovery, saying it was 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.

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 the Fed’s No. 2, she adopted a more centrist tone as she argued that low rates risk feeding asset price bubbles. [ID:nN11127864] However, analysts believe she could be 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 carried the day at the Fed, and all but one of the voting policy makers fell in line behind him on November 3. Bernanke has been careful to suggest he is sensitive to hawks’ concerns about the potential for easing to spark inflation, while at the same time continuing to make the case that easing is warranted.

“We’re not in the business of trying to create inflation, our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation, which I think we all agree could also be worrisome,” Bernanke said on November 6.

“We should not be satisfied with a situation where we have both a large amount of slack on the employment side and inflation which is below our generally agreed upon level and seems to be declining over time. That’s a signal that more should be done and that was the motivation for the action taken earlier this week.


The U.S. Senate banking committee meets on Tuesday to consider the nomination of Diamond, a Massachusetts Institute of Technology professor whose work helping explain unemployment and job markets won him the Nobel Prize in Economics this year. The views of Obama’s nominee to the Fed Board on monetary policy are not well known, but in his written responses to questions from Senator Richard Shelby in July he said deflation was a greater risk than inflation.

“At present I favor maintenance of the current level of ease, with vigilance to circumstances that might call for a change in either direction,” he said.


In the weeks before the Fed’s recent decision, Lockhart reluctantly came around to the view that the economy was weak enough to warrant further monetary easing.

Since the decision to buy a new round of Treasuries, aimed in part at bringing down too-high unemployment, Lockhart has warned that hiring is likely to remain sluggish.

“A return to a prerecession configuration of a firm’s labor force appears unlikely,” he said.

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