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Fed board member criticizes low interest rates

Esther George, president of the Federal Reserve Bank of Kansas City, has cast the lone dissenting vote at the last two Fed Open Market Committee meetings.
BY BRIANNA BAILEY Modified: April 4, 2013 at 9:17 pm •  Published: April 4, 2013

George receives economic information from boards that include business leaders from Oklahoma and the six other states the Kansas City Fed provides oversight for.

Speaking on the national economy, George said she believes the United States will continue its slow but steady recovery.

George said she expected GDP growth this year to be about 2 percent and that the unemployment rate will continue modest declines through the end of the year.

“At this pace, it is certainly less robust than other recoveries, but history does show that recoveries after a financial crisis are often slower,” George said. “Importantly, despite a variety of headwinds during this four-year period, the economy continues to improve in several key aspects.”

First, the pace of job growth has gradually been putting people back to work. The national unemployment rate has declined from its peak of 10 percent in October 2009 to its current level of 7.7 percent, and the private sector payroll has gained an average of 200,000 jobs per month.

“This pace of growth is a positive development in labor market conditions and compares favorably to pre-recession levels,” George said.

Mandated federal spending cuts due to sequestration and tax code adjustments will continue to slow the growth of the economy, she said.

“Uncertainty about fiscal policy and recurring fiscal deadlines, as well as the regulatory environment, is likely to continue the cautious attitude by businesses toward expanding capacity.”