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Article: Price stability belongs on Fed's back burner. (Federal Reserve Board) (Column)
- Article from:
- American Banker
- Article date:
- January 9, 1992
- Author:
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Price Stability Belongs on Fed's Back Burner
We are often told that monetary policy should take price stability as its principal objective. I would like to examine the practical meaning of such a view in today's circumstances.
There can be little doubt that price stability should be the central bank's objective over the longer run. Indeed, that is the only objective it can have, since its policies have no direct effect on productivity growth and the balance of saving and investment, which are fundamental to our economy's potential for long-term growth.
Price stability might well indirectly stimulate growth, by creating an economic atmosphere that ...