Goodfriend Tells Lawmakers He Backs Fed's Dual Mandate on Jobs, Prices -- Update
January 23 2018 - 11:13AM
Dow Jones News
By Kate Davidson
WASHINGTON -- Federal Reserve nominee Marvin Goodfriend told
lawmakers Tuesday he supports the central bank's dual mandate to
maintain stable prices and pursue maximum employment, despite his
past comments suggesting the Fed should focus on inflation.
Democrats pressed Mr. Goodfriend at his confirmation hearing to
explain those comments, including remarks in 2012 in which he
warned inflation could begin to rise dangerously if the Fed let the
jobless rate fall below 7%. The unemployment rate in December was
4.1%, and inflation has continued to run below the Fed's 2%
objective.
Mr. Goodfriend, a former Fed economist and a professor at
Carnegie Mellon University, said his comments were "academic," and
said he has argued that price stability is essential for the Fed to
pursue stimulative policies to help lower unemployment.
"I totally support it," he said of the central bank's dual
mandate, adding that he regretted referring to the dual mandate as
"incoherent."
Sen. Bob Menendez (D., N.J.) suggested Mr. Goodfriend had
experienced a "confirmation conversion." He asked whether Mr.
Goodfriend thought the Fed should have followed his advice to begin
raising short-term interest rates in 2012.
"No, I don't," he said, but added that his remarks were being
taken out of context.
"The history and the thinking about monetary policy has said if
we want to get unemployment down to the natural rate...we as
central banks need to stabilize long-run inflation expectations,"
he said. "That's all I'm saying."
Mr. Goodfriend also said he thought Fed policy was "more or less
on the right path" and that inflation was slowly rising and could
reach 2% in "a year or so."
Asked why he thought inflation was so low, Mr. Goodfriend said
that is a puzzle around the world. He attributed it in part to
global central bankers' commitment to keeping inflation
expectations anchored, which he said had "cut off the inflation
tail," as well as a long period of very low interest rates at
several central banks.
Write to Kate Davidson at kate.davidson@wsj.com
(END) Dow Jones Newswires
January 23, 2018 11:58 ET (16:58 GMT)
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