Federal Reserve Bank of Dallas President Richard Fisher talks about efforts by the Fed to add liquidity to financial markets, the outlook for the U.S. economy, Fed monetary policy and the central bank’s independence
00:00 “Tight” credit conditions, impact on economy
01:19 “Blocked” credit system, Fed interest rates
02:32 “Irrational fear”; risks to growth, inflation
04:55 Outlook for economy, inflation; deflation
07:29 U.S. fiscal policy, Fed quantitative easing
10:10 Potential to reignite inflation, Fed rates
10:53 Outlook for emerging markets, global economy
12:03 Global financial market regulation; summit
14:08 Next U.S. president’s Fed appointments
14:43 Impact of rescue efforts on Fed independence
Running time 16:18
Tight credit conditions may keep the U.S. economy in a slump through the end of next year, while inflation pressures have disappeared, Federal Reserve Bank of Dallas President Richard Fisher said.
“My forecast is I don’t see any economic growth through 2009,” Fisher said in a Bloomberg Television interview. “The credit crisis reached up and grabbed the throat of the global economy and choked off economic growth.”
Fisher supported the Fed’s decision last week to cut its benchmark interest rate to 1 percent in an effort to revive credit and keep a self-reinforcing decline in consumer spending and bank lending from triggering a global recession. In earlier votes, he had dissented five times because of concern over accelerating inflation.
Plunging commodity prices, including a more than 50 percent decline in the cost of oil, are likely to prompt declines in prices for a few months, Fisher said. Inflation pressures “vaporized” in September as the credit crisis worsened, he said.
Inflation has “screeched to a halt,” Fisher said. “I am not worried about that now. The issue presently is to get the credit system working again.”
Fed’s Fisher Says U.S. Economy May Slump Through 2009
Steve Matthews and Kathleen Hays
Bloomberg, Nov. 3 2008