KANSAS CITY, Mo. — The man who opposed every official action taken by the Federal Reserve last year continued to express his opposition to the current stance of monetary policy Wednesday and said he believes the economy should continue to recover and add jobs in 2011.
“The economy is in recovery, although at a moderate pace,” said Federal Reserve Bank of Kansas City President Thomas Hoenig. “Barring unexpected surprises, the recovery should gain momentum, which will encourage hiring and slowly bring down the unemployment rate.”
Hoenig said that while it would be nicer to see a faster retreat in unemployment, the economy is undergoing a major readjustment that slows the rate of improvement.
Hoenig’s comments come from the text of a speech he gave to the Central Exchange, a women’s organization.
He has rotated out of the voting roster of the interest-rate-setting Federal Open Market Committee, after an action- packed stint in 2010. Hoenig cast dissenting votes at all eight of the Fed’s meetings, worrying that very low interest rates and the resumption of a program to buy longer-dated Treasury bonds were setting the stage for problems.
His dissents garnered him considerable attention in financial markets and in the press, and some feared he was muddying the message the FOMC was trying to convey about the economy.
Hoenig again fretted about the path the Fed was taking in his speech. The FOMC “has maintained an emergency monetary-policy stance in a recovering economy and has continued to ease into the recovery,” he said. “I believe these actions risk creating a new set of imbalances, or bubbles.”
