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Fed's New Voting Lineup Won't Likely Alter Policy

The one official most likely to dissent this year from the Fed's easy-credit policies is one of the new voting members: Esther George, president of the Federal Reserve Bank of Kansas City. Like Lacker, George is known as a "hawk."

Among economists and Fed-watchers, hawks are those who tend to worry that interest rates kept too low for too long could escalate inflation or fuel asset bubbles. By contrast, "doves" place a higher priority on boosting the economy and reducing unemployment.

In a speech this month, George said the Fed's policies were making her uneasy. She said the central bank "must not ignore the possibility" that its interest rate policies could contribute to asset bubbles that could harm the financial system.

"Esther George could be the new dissenter," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "There is a history of that from the Kansas City Fed." At the Kansas City Fed, George succeeded Thomas Hoenig, who had often dissented from Fed policies he thought raised the risk of inflation.

The three other regional bank presidents who are gaining votes this year are Charles Evans of the Chicago Fed, Eric Rosengren of the Boston Fed and James Bullard of the St. Louis Fed.

Bullard's views are seen as middle of the road. But some analysts suggest that after George, Bullard would be most likely to dissent from a Fed vote out of concern that its policies might trigger high inflation.

By contrast, Evans is considered the Fed's most dovish official. Last year, Evans persuaded his fellow committee members to change the way the Fed provides guidance on its interest-rate policies to investors, consumers and businesses.

In December, the Fed did so: It scrapped the calendar dates it had been using as targets for when the first short-term rate increase might occur. Instead, the Fed said it would link its actions to specific economic markers. It said it expects rates to stay low at least until unemployment drops below 6.5 percent as long as inflation remains tame.

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