Last month, the Federal Open Market Committee voted to continue its bond-buying spree. The lone dissenting vote was the committee's newest member, Esther George.
George, the president of the Kansas City Federal Reserve Bank, voted against policies which included the continued monthly purchases of $40 billion worth of mortgage-backed securities, $45 billion worth of long-term Treasury bonds, keeping their target for the federal funds rate between 0 and .25 percent so long as the unemployment rate is above 6.5 percent.
George says her nay vote was due to concerns that
the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.
Her worries are not new. In fact, her predecessor Thomas Hoeing was known for voting against similar actions all eight times in 2010. George joined the Bank in 1982 and was promoted to first vice president of the Bank in 2009, shortly before her appointment as president in 2011. George and Hoeing worked together through the Savings and Loan crisis in the 1980s:
It’s hard for me to say I think about it very differently [from Hoeing], because Tom and I had some of the very same experiences coming through the ’80s and saw what caused banks to get into trouble.
I started [as a bank examiner] at a little bank in a strip mall in Oklahoma City called Penn Square Bank. That was my education.
I align pretty closely with Tom in thinking about how these risks can play out. We have watched for many years the funding advantage that has come from growing consolidation in the industry, so I wouldn’t paint myself very differently in terms of how I see those issues and the concerns.
While she doesn't believe that unemployment serves as the right target—she prefers to focus on inflation—George doesn't ignore its importance entirely:
Like others, I am concerned about the high rate of unemployment, but I recognize that monetary policy, by contributing to financial imbalances and instability, can just as easily aggravate unemployment as heal it.