Fed Move Highlights Economic Uncertainty: Lawmaker
A top Congressional Republican expressed skepticism on Thursday about how much the Federal Reserve can do with a new round of to bolster the economy and spur hiring, adding that it underscored how uncertain conditions really are.
In the wake of the Fed's decision to flood markets with a third round of monetary stimulus, Rep. Bill Huizenga told CNBC’s“Power Lunch”that “having these artificially low rates really just underscores the bad economic policies coming out of this administration and the uncertainty that’s out there.”
With the economy weak and unemployment stubbornly high, the Fedembarked on a third round of monetary stimulus, or quantitative easing. The central bank said it will buy $40 billion of mortgages per month in an open-ended operation.
That means the purchases will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve. (Read More:Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)
The Michigan Republican stated that "the fact that they feel they have to do this again is just underscoring what’s wrong with our economy.” He expressed doubt that the Fed's specific targeting of mortgage-backed securities would ultimately spur growth.
Huizenga, a member of the House financial services committee, said that taking mortgage rates from 3.25 to 3.15 percent isn’t going “to determine whether someone feels good about their situation in the economy and whether they’re going to be able to buy that house.”
(Read More:The World's Worst Central Bankers.)
He said consumers are more likely to take cues from their employer. Companies are “sitting on unprecedented amounts of cash because they feel frustrated by the tax and regulatory policies coming out and the uncertainty that’s being created,” he said.
Huizenga solving the fiscal situation is “dependent on whether the president is going to take us up to that 'fiscal cliff' or not. He’s been hard and strident in his language about wanting to have that tax increase.”
Huizenga added that the country needs to solve the fiscal cliff, when a host of tax cuts expire and automatic spending cuts kick in. Additionally, the congressman said “we shouldn’t be raising taxes at this point on anyone in the economy.”