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Jeffrey M. Lacker

June 22, 2012

Richmond Fed President Lacker Comments on FOMC Dissent

Richmond, Va.

“The Federal Open Market Committee voted on June 20, 2012, to continue the maturity extension program. Under that program, which began in September 2011, the Fed purchases Treasury securities with remaining maturities of six years to 30 years and sells an equal amount of Treasury securities with remaining maturities of three years or less. The Committee decided to continue the maturity extension program in order to put downward pressure on longer-term interest rates and promote a stronger economic recovery.

“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.

“My views on the economy and monetary policy are also available on richmondfed.org.”


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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