Charles Plosser at FRB of Philadelphia said QE3 won’t boost growth or hiring and may jeopardize the Fed’s credibility, which may be forced into selling assets in the open market when it needs to reduce stimulus. Central banks can’t effectively target employment levels the same way they can guide inflation rates because hiring also depends on variables unrelated to monetary policy, such as technology, education and tax rates. Plosser sees GDP growth of 3 percent in 2013 and 2014.
Narayana Kocherlakota at FRB Minneapolis says QE3 was necessary because interest rates may need to stay close to zero for four years to cut unemployment, as long as inflation doesn’t exceed 2.25 percent.
Jeffrey Lacker at FRB Richmond said QE3 won’t boost the labor market and will have a greater effect on inflation.
Richard Fisher at FRB Dallas said QE3 increased market expectations for higher inflation without more job creation.