NEW YORK – “The Federal Reserve’s quantitative easing program has shown that stabilization policy can be carried out effectively even when policy rates are near zero,” said Federal Reserve Bank of St. Louis President James Bullard.
“The Fed is very capable of conducting stabilization policy when policy rates are near zero. The quantitative policy should be conducted in a manner analogous to interest rate policy. This means adjusting the policy according to incoming information on the economy,” Bullard said in remarks today at St. Cloud State University, according to excerpts of the speech, which were released by the Fed.
Also, he said, if the Fed has “an appropriately broad regulatory responsibility,” it might be able to avert future crises.
Bullard said the Fed was designed with the intent to “keep some power out of New York and Washington,” so input comes from all areas of the country. He said this was one reason for its success.
The importance of maintaining the Fed’s independence from political influence is crucial to a stable economy, Bullard said, noting, “Politics ebbs and flows. If political shifts get translated into monetary policy, the result is more and unnecessary volatility in the U.S. economy.”
