While delivering a speech today, Mishkin also said the Federal Open Market Committee (FOMC) should make public a new inflation target in an effort to keep inflation prospects down. "I believe that the science of monetary policy indicates that the FOMC needs to go even further,” argued Frederic Mishkin.
Mishkin who is expected to step down from the FED board at the end of August 2008 also added, "The FOMC should lengthen the horizons of its projections, reach a consensus on a specific numerical value for the mandate-consistent inflation rate, and indicate that this consensus value would be modified only for good scientific reasons."
There has been a lot of debate amongst several key FED stalwarts over the virtues of adopting a numerical target for inflation. Mishkin expressed his dissatisfaction with little progress over the issue of setting a numerical target for inflation. The debate on this issue has since stagnated.
While quashing fears from some commentators, Federal Reserve Governor Frederic Mishkin said, "Some commentators have worried that establishing a specific numerical inflation objective might lead to an overemphasis on controlling inflation and not enough concern about stabilizing real economic activity.”
Mishkin expressed concern over the ability of FED policy to keep down the increasing inflation by arguing that the policy in use by the FED cannot help much. Inflation has been increasing in the US due to the high-energy prices. The U.S.Congress has since given the FED a dual mandate to pursue price stability and maximum sustainable employment.
Frederic Mishkin is an economist and member of the Board of Governors of the Federal Reserve System of the United States. He took office on September 5, 2006 to fill an unexpired term ending January 31, 2014. He submitted his resignation, effective August 31, 2008, on May 28, 2008 in order to resume teaching at Columbia Business School.
Source Reuters
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