NEW YORK (CNNMoney) - Forget the inflation hawks. Is unemployment, which hawks are quietly winning the debate at the Federal Reserve.Fed's dual mandate to promote maximum employment and price stability creates a natural conflict that policymakers debate the best action to stabilize the economy. But rarely in the history of the central bank was so pronounced that debate.
Three of the district bank presidents are vocal in their concerns that the Fed will create inflation by purchasing Treasury bonds and pumping up hundreds of billions into the economy.They are one reason the central bank has avoided a definitive action at meetings of recent years. And with the index of consumer prices last showing the highest inflation in three years, the inflation hawks is safe to start walking again.But they are likely to be canceled when the Fed meets next week. As the labor market remains flat, and the economy continues to slow, the central bank is expected to announce some kind of additional measures to tackle the U.S. economic slowdown and the unemployment rate stubbornly high.The falcon of unemployment were the most virulent Chicago Fed President Charles Evans, who said in a speech earlier this month that the persistence of high unemployment must be the focus of the central bank at the moment.He said that if inflation was several percentage points above the desired level as unemployment has been in recent years, members of the Fed "would act as if their hair were on fire. We should also be enabled on the conditions for improving the labor market. "And he is not alone in expressing support for more action.San Francisco Fed President John Williams essentially rejected the risk of inflation in a recent speech and claimed the attention of the Fed needs to focus more on jobs and growth low. Although Williams is currently an alternate member of the Federal Open Market Committee, will join the panel for setting the rates next year."The real threat is an economy that is at risk of dropping out and the prospect of several years of very high unemployment, with potentially long-term negative consequences," he said. "There are a number of potential steps the Fed could take to ease the financial conditions and extra come closer to our goals mandated maximum employment and price stability."Among these steps is a third round of purchases of Treasury, known as quantitative easing, or EQ3, although most economists believe the Fed will stop adding to an already bloated.But shifting the assets of the Fed's shorter-term Treasury bonds in the long term, a policy known as "Operation Twist" is likely, according to many economists, is that the elimination of interest paid to banks on their excess reserves .Observers say the Fed one of the things that will help the hawks unemployment tipped the scales is that they are supported by Fed chairman, Ben Bernanke, Vice President Janet Yellen and New York Fed's William President Dudley."These three are ready to act, and they are able to take the other in the center of the debate," said Paul Ashworth, chief U.S. economist at Capital Economics.
Three of the district bank presidents are vocal in their concerns that the Fed will create inflation by purchasing Treasury bonds and pumping up hundreds of billions into the economy.They are one reason the central bank has avoided a definitive action at meetings of recent years. And with the index of consumer prices last showing the highest inflation in three years, the inflation hawks is safe to start walking again.But they are likely to be canceled when the Fed meets next week. As the labor market remains flat, and the economy continues to slow, the central bank is expected to announce some kind of additional measures to tackle the U.S. economic slowdown and the unemployment rate stubbornly high.The falcon of unemployment were the most virulent Chicago Fed President Charles Evans, who said in a speech earlier this month that the persistence of high unemployment must be the focus of the central bank at the moment.He said that if inflation was several percentage points above the desired level as unemployment has been in recent years, members of the Fed "would act as if their hair were on fire. We should also be enabled on the conditions for improving the labor market. "And he is not alone in expressing support for more action.San Francisco Fed President John Williams essentially rejected the risk of inflation in a recent speech and claimed the attention of the Fed needs to focus more on jobs and growth low. Although Williams is currently an alternate member of the Federal Open Market Committee, will join the panel for setting the rates next year."The real threat is an economy that is at risk of dropping out and the prospect of several years of very high unemployment, with potentially long-term negative consequences," he said. "There are a number of potential steps the Fed could take to ease the financial conditions and extra come closer to our goals mandated maximum employment and price stability."Among these steps is a third round of purchases of Treasury, known as quantitative easing, or EQ3, although most economists believe the Fed will stop adding to an already bloated.But shifting the assets of the Fed's shorter-term Treasury bonds in the long term, a policy known as "Operation Twist" is likely, according to many economists, is that the elimination of interest paid to banks on their excess reserves .Observers say the Fed one of the things that will help the hawks unemployment tipped the scales is that they are supported by Fed chairman, Ben Bernanke, Vice President Janet Yellen and New York Fed's William President Dudley."These three are ready to act, and they are able to take the other in the center of the debate," said Paul Ashworth, chief U.S. economist at Capital Economics.
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