Kohn: Monetary Policy

Monetary policy is positioned to promote employment and keep inflation in check, but policymakers will keep an eye on inflation, Federal Reserve Board vice chairman Donald L. Kohn said yesterday.

“The Federal Open Market Committee will be monitoring inflation developments closely for any sign that our longer-run objective of promoting price stability is threatened,” Kohn said, according to prepared text of a speech released by the Fed. “At the same time, we also need to continue to carefully assess whether, after a period of near-term softness in economic activity, the economy is likely to be on track for sustained economic expansion over time.”

“With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation over the medium term,” he said. “But a large measure of uncertainty surrounds that judgment and as the economy evolves, so will the appropriate stance of policy.”

 

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