Lacker Says QE to Give Small Boost While Raising Prices

Federal Reserve Bank of Richmond President Jeffrey Lacker said the Fed’s decision last month to step up record stimulus through bond purchases will probably give the economy just a small boost because inflation may rise.

“Monetary policy is simply unable to offset all of the ways in which various frictions impede the economy’s adjustment to various shocks,” Lacker said today in the text of a speech to government and business leaders in Roanoke, Virginia. “The term ‘maximum employment’ in our congressional mandate should therefore be thought of as the level of employment that currently can be achieved by a central bank.”