Fed Officials: Hawks, Doves, and In-Betweeners

Chairman Ben Bernanke may be the most popular guy over at the Federal Reserve, but he isn’t the only one who calls the shots on monetary policy decisions. Let’s get to know the other members of the central bank and see what they have to say regarding the Fed‘s stimulus exit plan.

Hawks: Plosser, Fisher, and Lacker

The hawks are those who are more aggressive towards tightening monetary policy. As of late, these guys have been arguing that asset purchases be tapered off as early as June.

Among them are Dallas Federal Reserve Bank President Richard Fisher, Philadelphia Fed President Charles Plosser, and Richmond Fed President Jeffrey Lacker. All three of them agree that purchases of mortgage-backed bonds should be stopped.

Fisher and Lacker both point to the pick-up in home prices and housing construction, saying that these indicate that mortgage-backed securities are no longer needed. Meanwhile, Charles Plosser says that the improving general economic backdrop is also enough reason to take a step back from easing.

Doves: Evans, Rosengren, and Bullard

On the other side of the spectrum, there are the doves who think that the Fed’s ultra-loose monetary policy is appropriate. Fed Chicago President Evans acknowledges the improvements in the labor market but thinks that it might still be too early to withdraw stimulus.

Meanwhile, Federal Reserve Bank of St. Louis President James Bullard is still unsatisfied with the economic growth, which he says is still slower than expected. And then there’s Boston Fed head Eric Rosengren who argues that the Fed should add more stimulus with inflation still low and unemployment still high!

In-Betweeners: Raskin and Dudley

Lastly, we have those caught in the middle, still undecided whether the Fed should carry on with its open-ended easing program or not.

In her speech last week, Sarah Bloom Raskin, a member of the Fed Board of Governors, said that it was still too early to tell if the Fed’s latest stimulus program is having a good impact on the U.S. economy. She did note that some sectors have already showed improvements but that the pace of recovery was still disappointingly slow.

Earlier this week, New York Fed President William Dudley mentioned that he expects QE to be tapered off at some point but that the fiscal drag is still weighing growth down. With that, he remarked that he isn’t sure if the next monetary policy move should favor the hawks or the doves. For now, he is waiting for the labor and inflation outlook to change “in a material way” before deciding how to adjust the pace of bond purchases.

If there’s one conclusion that we can draw from these recent speeches by the Fed officials, it’s that the central bank members are still very much divided on the issue of exiting the stimulus program. Fed Chairman Bernanke’s speech this week should provide a better idea on what the Fed’s next moves will be, although he appears to be leaning towards the non-committal to dovish end of the spectrum.

It is also important to note which among these Fed officials are actually voting members of the FOMC, and these are Bernanke, Rosengren, Bullard, Evans, Dudley and Raskin – all of which are in no rush to end QE. Fisher and Plosser are merely alternate members, which means that they attend the committee meetings and participate in the discussions but are not entitled to vote on policy setting.

In a nutshell, it appears the FOMC won’t be looking to make any changes in monetary policy anytime soon, based on the sentiments of its voting members. How about you? When do you think should the Fed start dialing back the pace of its bond purchases? Let us know by voting through the poll below!