(Reuters) – U.S. unemployment remains “painfully high” while inflation is not an immediate concern, giving the Federal Reserve plenty of reason to launch a new stimulus last month, a top Fed official said.
Jeremy Stein, in his first keynote speech since becoming a Fed governor in May, said he strongly supported the central bank’s decision to embark on a new, open-ended bond buying program.
His comments suggest that despite cries of foul from a handful of hawkish regional Fed bank presidents, Fed Chairman Ben Bernanke had solid backing for the third round of quantitative easing, or QE3, announced in September.
Stein said the plan was needed to boost an economy that was growing too slowly to bring down the nation’s unemployment rate, currently at 7.8 percent.
“It appears that the economy is growing at a pace such that, absent policy action, progress on reducing unemployment will likely be slow for some time,” Stein told an event at the Brookings Institution. “Given where we are, and what we know, I firmly believe that this decision was the right one.”