Esther George Hawkish, but Not Too Hawkish

If one FOMC member is going to be calling for a tapering or an outright end to the quantitative easing part of the easy money policy, it is Esther George. Her speech on Tuesday conveyed her counter-thoughts on being a FOMC outsider on policies.

She did forecast that the economy will push through current obstacles with GDP at 2% with low inflation in 2013 and 3% in 2014 and lower unemployment coming in 2014. She did confirm that the Fed’s balance sheet is expanding by more than $1 trillion per year.

Specifically she said on slowing the bond buying, “I support slowing the pace of asset purchases as an appropriate next step for monetary policy. Moreover, such actions would not constitute an outright tightening of monetary policy, but rather, it would slow policy easing. History suggests that waiting too long to acknowledge the economy’s progress and prepare markets for more-normal policy settings carries no less risk than tightening too soon… a slowing in the pace of purchases could be viewed as applying less pressure to the gas pedal, rather than stepping on the brake.”

FULL ESTHER GEORGE SPEECH