…definitely not the same as the old board members.
From CNNMoney:
“It’s a new year. And that means a new, and probably less divided, Fed.
The Federal Reserve is playing its annual game of musical chairs, rotating voting members on its policymaking committee.
While the Fed board of governors and the president of the New York Federal Reserve always have votes, the other Fed presidents take turns serving on the committee.
This time around, the rotation brings on four voting members who are likely to be a far less contentious group than the four they are replacing.
The Federal Open Market Committee’s new roster includes presidents Jeffrey Lacker of Richmond, Sandra Pianalto of Cleveland, Dennis Lockhart of Atlanta and John Williams of San Francisco.
All but Lacker are considered either moderates or inflation doves, meaning they’re more likely to favor stimulative policies that promote economic growth, even at the risk of higher inflation.
That stands in stark contrast to last year’s voting Fed Presidents, three of whom were considered inflation “hawks.” Fearing monetary stimulus could send prices rising too rapidly, they each dissented twice against the Fed’s policies…”
With an economic recovery around the corner, would this change in the Federal Resereve Open Market Committe (FOMC) represent a good change or something that could hurt the recovery?
The key inflation index used by mainstream economists, the Consumer Price Index (CPI), has been stable, indicating that there is no apparent danger. However, relative prices are always changing and represent the bigger threat; and now that the recovery appears to be on its way the Fed will have to deal with the problem of the excess reserves piled high in the banking and financial system. With more investor and consumer confidence these funds will start making their way into the economy. This may cause great inflationary pressures, something that will be exacerbated by a new round of QE3—as these changes in the FOMC may to lead to.
So the question: are three more “inflation doves” in the FOMC what the Fed, and the country, need at the moment?
Give us your take.
image: freedigitalphotos.net/Matt Banks
