Volcker Cautions Federal Reserve May ‘Fall Short’

[marmar]

(Bloomberg) Former Federal Reserve Chairman Paul Volcker said today the central bank will probably “fall short” by being asked to do too much.

“It’s fashionable to talk about a dual mandate, that policy should somehow be directed toward two objectives, of price stability and full employment,” Volcker told the Economic Club of New York. “Fashionable or not, I find that mandate both operationally confusing and ultimately illusory.”

With unemployment lingering at 7.5 percent -- still higher than before the last recession -- the Federal Open Market Committee announced May 1 that it will increase or decrease the pace of its monthly bond purchases in response to changes in inflation and the labor market. The policy makers agreed to maintain monthly buying of $40 billion in mortgage securities and $45 billion of U.S. Treasuries in a bid to boost employment.

“Asked to do too much, for instance to accommodate misguided fiscal policies, to deal with structural imbalances, to square continuously the hypothetical circles of stability, growth and full employment, then it will inevitably fall short,” Volcker said. Those efforts cause it to lose “sight of its basic responsibility for price stability, a matter that is within the range of its influence.” ..................(more)

The complete piece is at: http://www.bloomberg.com/news/2013-05-29/volcker-cautions-federal-reserve-may-fall-short-.html

[nebenaube]

1. nationalize their ass!