Feds Lacker Discusses Interest Rate Hikes, Monetary Policy In Carey Speech

Main navigation Johns Hopkins Legacy Online applications Faculty Directory Experiential studying Career resources Alumni mentoring program Util Nav CTA CTA Breadcrumb Fed’s Lacker Discusses Interest Rate Hikes, Monetary Policy in Carey Speech Richmond Federal Reserve Bank President Jeffrey Lacker visited the Johns Hopkins Carey Business School on Feb. 25 and spoke about the various results the central bank’s monetary coverage performs on economic exercise. In his address, delivered as a part of the varsity’s Leaders+Legends speaker sequence, Lacker said the debate across the effectiveness of monetary coverage is a “longstanding topic of inquiry in economics,” however one that is significantly related right now. Click hereto view a video of Lacker’s speech. Lacker’s speech and the subsequent Q and A session (29:42) touched on quite a lot of matters; most notably, the central financial institution’s function in curbing inflation (6:29), his forecast for potential rate of interest hikes in 2016 (forty five:57), the tradeoffs of techniques like quantitative easing (fifty one:45) and credit score allocation (10:04), and the notion that banks are “too massive to fail” (30:20). Overall, Lacker downplayed the function of central financial institution policy in spurring economic development; instead pointing to other elements like technological developments and human capital (4:07). “That monetary coverage has a big, direct effect on financial progress (is) a presumption, I will argue, based mostly on a misunderstanding of what financial coverage can and might’t do,” Lacker said, (2:31). Later adding (28:forty eight): “The role of the Fed is not to forestall each recession, or to appease each occasion of economic instability; neither is it in our energy to do so. Central banks garner too much praise when times are good; and an excessive amount of blame when occasions are bad.” He did, however, cite the importance of the central financial institution in different areas of monetary policy, specifically inflation (29:14). “Still, the Fed does have an important role to play in fostering financial progress. … In my view, crucial contribution central bankers could make to financial progress is low and stable inflation,” he stated. Regarding the possibility of interest rate hikes in 2016, Lacker stated he believes there may be still a solid case to be made for a number of possible hikes this yr, citing components like strong job and GDP growth. Lacker’s 100 International Drive