Fed Won't Signal More Easing: Ex-Governor Meyer

The Federal Reserve will acknowledge the economy is weaker when the Federal Open Market Committee meets Tuesday, but they will not issue a policy statement indicating plans to ease monetary policy, former Federal Reserve Board Governor Laurence Meyer told CNBC Tuesday.

"Nobody will favor QE2 (a second wave of quantitative easing), absolutely nobody," Meyer said of the FOMC members. "They are miles away from it."

The committee will likely have a more pessimistic assessment of the economy, and will tone down their view of a strengthening labor market, but they won't take action, said Meyer, who is vice chairman of Macroeconomic Advisers.

"Instead of saying financial conditions are restraining the economy, they’ll say that financial conditions have become more accommodative and are now supporting growth," Meyer said. "And that’s the reality."

Some market participants think the Federal Reserve may lend support to the economy by reinvesting cash from maturing mortgage-backed securities on its balance sheet into Treasurys. Typically, the Fed takes a more conventional approach and lowers the Fed Funds rate to kick start the economy.

Randall Kroszner, also a former Federal Reserve Board governor, said on the same CNBC panel that the committee is likely to have a "robust discussion of whether they need to stop the shrinkage of the balance sheet," although Kroszner said it's an open question whether the FOMC does it now or not.

Meyer countered that six weeks of weaker data is not enough for the Fed to switch gears. While the committee is likely to discuss options for easing, they won't do anything, he said.

"Anybody who thinks they are going to start asset purchases are crazy," Meyer added.

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