Another round of monetary stimulus from the Federal Reserve is not the way to grow the economy, Mitt Romney said in an interview that aired Sunday.
Instead, the presumptive Republican presidential nominee said on CNN’s “State of the Union,” “it is the time to create the incentives and the opportunities for entrepreneurs—businesses big and small—to hire more people, and that is going to happen. You are going to see that happen in this country but not under this president.”
Federal Reserve Chairman Ben Bernanke announced no new stimulus action last week but said the Fed “will provide additional accommodation as needed” to spur economic growth.
Twice since 2008 the Fed has engaged in quantitative easing, a practice in which the nation’s central bank creates new money to buy financial assets, such as US Treasury bonds, with the goal of driving down interest rates. Lower rates can make borrowing money easier for homeowners and businesses.
But quantitative easing can also promote inflation.
“I think the Fed’s first action in quantitative easing was effective, to a certain degree,” Romney said, referring to the Federal Reserve’s purchase of $1.75 trillion of Treasury bonds and mortgage-backed securities between December 2008 and March 2010. “But I believe that QE2, the second round of easing—I don’t think it had the impact they were hoping for,” Romney said of a $600 billion stimulus between November 2010 and June 2011.
“I am sure the Fed is watching and will try to encourage the economy,” Romney added. “But I don’t think a massive new QE3 is going to help this economy.”
Romney said his economic recovery plan would create 12 million jobs during his first term, a declaration he made for the first time last week.
To achieve Romney’s goal, the economy would have to add an average of 250,000 jobs per month over four years. The economy added 163,000 jobs last month, according to a Bureau of Labor Statistics report published Friday.
Romney said his growth projection is realistic.
“That is what happens in a normal process,” he said. “When you come out of the kind of recession we’ve had, you should see this kind of creation. We should be seeing 200-, 300-, 400,000 jobs a month to regain much of what has been lost. That is what normally happens after a recession, but under this president we have not seen that kind of pattern.”