The Fed's Two Chucks Cower at Eurozone Contagion
Even though neither Evans nor Plosser have really vocally contested the Fed's continued commitment to cheap, easy money, they somehow felt compelled to reiterate their feelings over the weekend, this time blaming Europe. First it was the fragility of the U.S. "recovery", then continued unemployment, then trouble in commercial real estate then the boogeyman assraping unicorns under their beds... whatever it takes, right?
Federal Reserve Bank of Chicago President Charles Evans indicated that the European sovereign debt crisis will prompt the U.S. central bank to delay raising interest rates.
Evans told reporters in Seoul today that he “wouldn’t be surprised” if the Fed’s policy of keeping rates low “gets extended just a little bit.” Philadelphia Fed President Charles Plosser, who is attending the same event, said separately that “how the crisis in Europe ends up affecting the economy will dictate how we will respond.”
No no, former #2 favorite Fedhead, that's not how it should work. Of course, the Fed can't keep the fire hose pointed towards Europe while simultaneously maintaining a commitment to higher interest rates that more accurately reflect a normal economy.