Published May 08, 2012 13:08
Federal Reserve Bank of Richmond President Jeffrey Lacker said much of U.S. unemployment results from structural weaknesses like inadequate training that can’t be fixed by additional Fed stimulus.
“Some commentators are urging the Fed to take additional action as long as the unemployment rate remains elevated,” Lacker said Monday in Greensboro, North Carolina. “But if elevated unemployment reflects largely fundamental factors rather than insufficient spending, such stimulus might have little impact on unemployment and instead just raise the risk of pushing inflation up.”
Lacker has dissented at all three meetings this year of the policy-setting Federal Open Market Committee. On April 25 the FOMC said the economic outlook will probably warrant “exceptionally low levels for the federal funds rate at least through late 2014.” Lacker disagrees, saying in an April 27 statement that “an increase in interest rates is likely to be necessary by mid-2013” to hold down inflation.