Federal Reserve Bank of Chicago President Charles Evans said policy makers must not be passive in the face of high U.S. unemployment, firing back at critics of the Fed's decision this month to step up record stimulus.
"We cannot be complacent and assume that the economy is not being damaged if no action is taken," Evans said today in the text of remarks prepared for delivery in Hammond, Indiana. "If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s."
The policy-setting Federal Open Market Committee started a third round of quantitative easing this month, saying it would buy $40 billion in mortgage bonds a month until the labor market improves. The decision drew criticism from some Fed officials, including Philadelphia Fed President Charles Plosser, who said the new accommodation will do little to spur job growth while stoking inflation.