Bank President Jeff Lacker recently talked with MarketNews International’s Steve Beckner.
During a discussion on the economy and recent monetary policy actions, Lacker noted that it will be important for the Fed to keep an eye on inflation and adjust policy in a timely way to avoid significant increases in inflation. "Our credibility, the credibility that matters, has to do with [our actions regarding] inflation."
The August 15 interview part 1, part 2 followed the August meeting of the Federal Open Market Committee. That's when the committee downgraded its economic outlook, citing economic growth as "considerably slower than expected," a "deterioration of overall labor market conditions," and household spending as having "flattened out." One of the more notable changes in the FOMC statement came with the Committee's announcement to keep the federal funds rates low through mid-2013, rather than for "an extended period."
Beckner asked Lacker about the change in the FOMC's language. "The statement laid out an assessment of the economy that was notably less optimistic than in the spring," said Lacker. But, he said, the stated time period for low funds rates represented "more of a forecast than a commitment." The FOMC meets again on September 20.
All FOMC members participate fully in the Committee’s deliberations, although several members vote on a rotating basis. Jeff has been a voting member twice since becoming president in 2004. He will return as a voting member in January 2012.