Hard Choices, Thomas M. Hoenig, President, Federal Reserve Bank of Kansas City, Town Hall Meeting, Lincoln, Nebraska, August 13, 2010
Not in decades has the Federal Reserve seen such challenges in how it conducts monetary policy. With this in mind, this morning I will give you my sense of the issues we face and the hard choices that must be made. I’ll begin by focusing on financial reform legislation, including my observations about where we are with too-big-to-fail. Then I’ll turn to the economy and monetary policy…Economic conditions are far from satisfactory, unemployment is simply too high, and we want a stronger recovery. But as much as I want short-term improvement, I am mindful of possible longer-term consequences of zero interest rates and further easing actions. Rather than improve economic outcomes, I worry that the FOMC is inadvertently adding to uncertainty by taking such actions. Remember, high interest rates did not cause the financial crisis or the recession. Let me summarize four key points that I judge relevant in choosing among monetary policy options.”
