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Fed's Lacker Explains Dissenting Vote at FOMC Meeting

June 22, 2012 @ 8:03 AM EST

by The "State" Team

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Richmond Fed President Lacker Explains Dissenting Vote

On June 20, 2012, the Federal Open Market Committee voted to extend its “Operation Twist” program from month-end to the end of 2012. Richmond Fed President Jeffrey Lacker voted “no” on the measure saying that it was not needed.

In a statement posted on the Federal Reserve Bank of Richmond’s website Lacker explained his dissenting vote.

“I dissented on this decision because I do not believe that further monetary stimulus would make a substantial difference for economic growth and employment without increasing inflation by more than would be desirable. While the outlook for economic growth has clearly weakened in recent weeks, the impediments to stronger growth appear to be beyond the capacity of monetary policy to offset. Inflation is currently close to 2 percent, which the Committee has identified as its inflation goal. A significant increase in inflation could threaten the Fed’s credibility and make it more difficult to achieve the Committee’s longer-run goals, including maximum employment. Should a substantial and persistent fall in inflation emerge, monetary stimulus may be appropriate to ensure the return of inflation toward the Committee’s 2 percent goal.”

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