Federal Reserve Bank of Richmond President Jeffrey Lacker, who has opposed additional stimulus, said monetary policy is restricted in its ability to improve the labor market.
“As we’ve seen during the recovery from the Great Recession, there are significant limits to the power of monetary policy to affect the real economy,” Lacker, who doesn’t vote on policy this year, said in a speech in Baltimore. He didn’t comment on the outlook for monetary policy or the economy in his prepared remarks.
Policy makers are debating how to curb record stimulus amid a deadlock over the federal government’s budget and disagreement on raising the debt ceiling to avoid default. The Federal Open Market Committee at its next gathering on Oct. 29-30 will weigh the impact from the government’s partial shutdown as they debate tapering the $85 billion pace of monthly bond buying to boost the labor market.
“Federal Reserve policy actions cannot necessarily counteract the effects of fiscal policy uncertainty, declining productivity growth or structural changes in the labor market -- all of which now appear to be playing a role to some degree,” Lacker said to the Council for Economic Education conference.
Lacker, in prior speeches, has said unemployment remains elevated because the labor market has become less efficient in matching jobs with needed worker skills.
The Richmond Fed president today said higher education wasn’t the right choice for all students, though completing college work boosted earnings for most graduates.
“A better focus might be educating students about both the risks and rewards of college so they can understand whether it is the right choice for them and how to enhance their prospects of success,” he said.
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