Federal Reserve Governor Elizabeth Duke said monetary policy coordination among central banks is usually not ideal and each central bank must have tools to carry out objectives independent of its counterparts.
“While central banks may benefit from coordination and cooperation, taking the same policy stance at the same time typically will not be the best choice for all central banks,” Duke said today in remarks prepared for a speech in Mexico City.
The Fed and five other major central banks reduced interest rates in October 2008 in response to economic weakness and have cooperated on financial regulation, including raising international bank capital standards, Duke said. Since then, the economies of the various nations have rebounded at different rates, prompting different monetary policies.
“It is imperative for each central bank to have monetary policy tools to appropriately address domestic objectives independent of the actions of other central banks,” Duke said to the Center for Latin American Monetary Studies 60th Anniversary Conference.
The Fed official didn’t comment on the outlook for the U.S. economy or monetary policy.