“Monetary policy is simply unable to offset all of the ways in which various frictions impede the economy’s adjustment to various shocks,” Lacker said in remarks yesterday to the Money Marketeers of New York University.
The Fed said on Sept. 13 it will purchase $40 billion of mortgage bonds a month to pump money into the economy and boost employment. Lacker voted against the plan.
The U.S. jobless rate has been more than 8 percent for 43 months, prompting Bernanke to pledge stimulus in the form of bond buying until the labor market improves “substantially.”
New-home construction in the U.S. rose 2.3 percent in August to a 750,000 annual rate, from a revised 733,000 annual pace in July, according to the Commerce Department. A Bloomberg News survey of 85 economists before the report forecast new-home starts increased to 767,000. Building permits declined 1 percent, data showed.
Treasuries rose over the past two days on speculation it will take time for the Fed’s efforts to work.
New York Fed President William C. Dudley said yesterday the central bank’s new stimulus is vital for boosting “unacceptably slow” improvement in growth.
The Fed is in the process of exchanging shorter-term Treasuries in its holdings with those due in six to 30 years to put downward pressure on long-term borrowing costs.
The central bank is scheduled to buy today as much as $2 billion of securities maturing from February 2036 to August 2042 as part of the program, according to the website of the Fed Bank of New York.
Treasuries earlier pared an advance after the Bank of Japan unexpectedly increased its asset-purchase fund to 55 trillion yen ($697 billion) from 45 trillion to counter economic contraction.