Fed Unsure of How to Boost Productivity, Vice Chairman Fischer Says
NEW YORK (TheStreet) -- The Federal Reserve's recent hands-off approach to monetary policy has helped lead to volatility in global markets.
Federal Reserve Vice Chairman Stanley Fischer believes that the central bank's recent decisions are based upon uncertainty in Europe, U.S. productivity and the upcoming U.S. presidential election.
"Hesitation is coming from precisely [those] factors; we got hit by something, we're still evaluating it," Fischer said this morning to CNBC's Sara Eisen on "Squawk on the Street."
"Technically we have to get something moving on productivity growth and that's not something we're good at doing. We don't know precisely how to do it," he noted.
The lack of productivity growth is not within the Fed's direct influence, according to Fischer, despite how well they run monetary policy. By "being more predictable" Fischer hopes the Fed will be able to "encourage more investment" to "help get productivity going," even if that "isn't going to make an enormous change.
Fischer says that "we're all trying to find out whether what's going on is a long-term change or a result of the cyclical situation," presenting the caveat that "[the U.S. economy] really turns on productivity."
"We've done everything we can and we've got achievements on employment. But productivity isn't going up and that's the remaining big factor in growth," Fischer noted.
May's "very negative employment number" added to the existing concerns about Brexit's possible effect upon the European Union and the U.S. election "is a source of uncertainty" for the Fed, Fischer stated.
Yet he believes stability in China will help global factors due to a more "logical process" in how the plan on "fixing the exchange rate." "The Chinese have got themselves more organized ... so it's a better situation and they're still growing very fast, but not as fast as they have," Fischer added.