The Federal Reserve should manage the economy with the sole aim of keeping inflation rates in check and forget about dwelling on unemployment figures, says Richmond Federal Reserve Bank President Jeffrey Lacker.
The Fed currently conducts monetary policy with a dual mandate, which means it adjusts interest rates and other monetary policies to take inflation and unemployment rates into consideration.
Creating jobs, Lacker says, should be the federal government's role, and not the Fed's.
"Right now, the best contribution the Fed can make to the recovery is to keep inflation stable around 1.5 percent to 2.0 percent," says Lacker, a noted inflation hawk, according to The Wall Street Journal.
The suggestion box is filling up to amend other Federal Reserve policies as well.
Currently, the Fed hikes and cuts interest rates to guide inflation rates, but the monetary authority is not required a to set a specific inflation target in the process.
|Fed Chair Ben Bernanke
(Getty Images photo)
Federal Reserve officials have discussed adopting a target, although no changes are imminent, for now.
Should the Fed stick with its dual mandate of keeping inflation in control and unemployment at optimum rates, a specific target would help, says Federal Reserve Chairman Ben Bernanke.
"We need to make sure that it is well understood both by the public and by Congress that having a target would not mean that we are abandoning the other leg of the dual mandate," Bernanke has said, according to Reuters.
"I don't think there's a real barrier to setting a target. However it is very important that first, that we communicate to the public what we are doing."
Many central banks around the globe set official inflation targets.
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