Fed President Jeffrey Lacker Tells Charlie Rose: 'More QE Is NOT The Answer, Wall Street Bailouts Were Wrong'
UPDATE: Lacker is the only Fed president who voted 'no' on QE3 today.
Do not skip this.
Charlie Rose with Richmond Fed President Jeffrey Lacker - Aug. 24.
Lacker has voted against Bernanke at all 6 FOMC meetings so far this year.
“My sense is that monetary policy isn’t capable of having a material effect on growth, or employment, or unemployment at this point,” Lacker said in an interview on the “Charlie Rose” show broadcast today. “I’m in the camp of being a bit of a skeptic about more monetary stimulus at this time.”
Lacker dissented from the committee’s Aug. 1 decision to reiterate a conditional commitment to keep the benchmark lending rate close to zero “at least through late 2014.”
Mr. Lacker acknowledged the economic recovery has disappointed Fed officials.
"It's really trying our patience. The economy's growing slowly," he said.
Lacker said the Fed’s 2010 asset purchase program “may have increased inflation a bit.”
“Inflation’s in a good place right now though,” he said. “I don’t think we want to push it up any higher.”
People may be expecting too much from central banks, which can't heal all economic problems, the Richmond Fed chief said.
"Central banks around the world are--have been asked to do too much," Mr. Lacker said, when asked about the recent actions of the European Central Bank. "Expectations about central banks has gotten a little bit ahead of...reality."
The Richmond Fed chief dismissed the argument some economists have made to let inflation rise a bit above the Fed's 2% goal to help bring down unemployment, saying such a move could imperil the Fed's hard-fought credibility.
"You don't want to drift up to 3 [percent] and then have it be in question because it'll be costly to get it back down again," he said.
Mr. Lacker praised former Fed Chairman Alan Greenspan for raising interest rates in 1994 at a time when inflation wasn't rising.
"That cemented our credibility, cemented the commitment the Fed had made to keeping inflation low and stable," he said.
Mr. Lacker said the Fed still had work to do making sure that the government is no longer expected to bail out failing firms and that banks don't become so large and interconnected that one bank's failure could imperil the whole financial system.