Lacker Says Expanding Fed Assets Increases Costs of Any Missteps

Federal Reserve Bank of Richmond President Jeffrey Lacker, who voted repeatedly last year against expanding stimulus, said the Fed’s $3.72 trillion-dollar balance sheet and guidance on the likely path of interest rates increase the risks and costs of policy mistakes.

“My concern is that the combination of forward guidance and a very large balance sheet has raised the likelihood of policy mistakes going forward, and also has raised the cost of such mistakes, should they occur,” Lacker said today in a speech at the Swedbank Economic Outlook Seminar in Stockholm.