The Federal Reserve’s “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, says Kansas City Fed president Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon.
“Once again, there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank’s longest-serving policymaker and lone dissenter at meetings last year, said in a speech Wednesday in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.”
Fed policymakers, who affirmed plans March 15 to buy $600 billion in Treasury securities through June, disagreed this week over whether to curtail the purchases, end them early or keep the program in place.
St. Louis Fed president James Bullard said the plan may need to be cut by about $100 billion. The Boston Fed’s Eric Rosengren said high unemployment and low core inflation mean it’s still too soon to withdraw record monetary support for the economy.
