Federal Reserve policy can have an impact on the weak labor market and that is what justified the central bank's decision to launch a third round of asset purchases, colloquially known as QE3, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank, on Friday. "As I approached the FOMC meeting last week, I concluded that there was indeed a call to action falling out of the discouraging conditions of slowing growth and still high unemployment with meager recent progress in bringing it down," Lockhart said in a speech to a business group in Atlanta.
Lockhart observed that, against what has been a longer-running trend of moderate growth, recent data suggested the economy was losing steam, and that already-tepid job-market gains were moving toward something even weaker. And new FRS QE3 program is just on time.
"By maintaining downward pressure on mortgage rates and by encouraging growth of mortgage-financed purchase activity, sales activity in the Southeast and nationwide should accelerate, and upward pressure on home prices should contribute to consumer confidence," and "improving housing sector will help calm one headwind that has impeded a stronger recovery," Mr. Lockhart said.
The actions "will help," Mr. Lockhart said, adding that "the necessary natural healing from the large disruption of the financial crisis will certainly be supported, and likely accelerated" with the new central-bank actions and added: added: "if do not see improvement, more action may be taken."