By BRENT MARTIN
St. Joseph Post
Former Kansas City Federal Reserve President Esther George called on the Fed to act sooner to head off inflation, a call not heeded by the Federal Reserve.
Then, as a voting member of the Federal Open Market Committee last year, George voted against a three-quarters of a percent raise in interest rates.
George doesn’t see a contradiction in her action.
“My concern in June was we should strike a steady path and be very clear that we are raising rates, we are going to bring down that big balance sheet we have, but not to move in a way that would be so disruptive to the economy,” George tells KFEQ/St. Joseph Post in an interview.
This is the second of our two-part series with George.
George, a native of Faucett, served as Kansas City Fed president from 2011 until the end of January when Federal Reserve policy forced her to retire.
There have been some who call George a “contrarian voice.” George says she voted against the majority at times as a member of the Federal Open Market Committee, but she sees those not as contrarian votes, but as votes of conscience.
“I think it does no good to any important decision to have a consensus that is not challenged,” George explains. “And so, I wouldn’t call myself a contrarian for the sake of being contrary to an idea, but I do think it’s critical, and you’re obligated in my view when you serve the public, to say when you see it differently.”
George says that while she believes the Federal Reserve took too long to act, it must be cautious not to raise rates too quickly and send the economy into recession.
George shakes off suggestions the economy has slipped into recession already, stating the strength of the economy now is the very low unemployment rate.
“So, I think what we see now in reality is a very tight labor market with inflationary pressures continuing,” George says. “That does not look like a recession to me.”
The Federal Reserve’s real strength, according to George, is its decentralization into 12 regional Federal Reserve Banks, allowing George during her tenure as KC Fed President to bring to the table concerns from the Heartland.
“My ability to cover a seven-state region that included St. Joseph, Missouri allowed me to work on the ground and hear directly from the public on how the Fed’s policy, how the economy, was affecting them,” according to George. “And that was a tremendously important perspective to take to Washington then to make decisions about monetary policy.”
While the Fed controls monetary policy, its role in keeping the economy healthy is limited, according to George.
“So, I think it’s always a challenge to explain to the public, yes, the Fed has an important role, but it is not the only game in town and cannot solve all the economic issues that our country faces.”
George says she plans to take a little time in retirement to decide her next steps. She says she does plan to attend to some needs at the family farm near Faucett and take more time for her family.