Kocherlakota Opposes Adding Financial Stability To Fed's Mandates

By Greg RobbMarketWatch Pulse

Adding financial stability as an explicit goal of U.S. interest-rate policy is likely to add to pubic uncertainty about U.S. interest-rate policy and the economy, said Narayana Kocherlakota, the president of the Minneapolis Fed, on Friday. Earlier at the same conference,Boston Fed President Eric Rosengren argued that financial stability should be an explicit goal for the U.S. central bank, and showed evidence in a paper that policymakers had been adjusting interest rates based on their concern for financial stability in the past. This argument of an unstated but existing goal is "disturbing," Kocherlakota said. "Is it appropriate for a group of unelected officials to make up their own, relatively secret, objective for monetary policy? And how can this opaqueness in the formulation of policy be expected to lead to better policy outcomes?" Kocherlakota asked.

Copyright © 2015 MarketWatch, Inc.

Continue Reading Below