Fed officials say rates should not be used to fight bubbles

A trio of Federal Reserve officials who disagree deeply with one another over the appropriate stance of monetary policy on Friday expressed a shared distrust for using interest rates to head off asset bubbles and other forms of financial instability. Both Richmond Fed President Jeffrey Lacker, a policy hawk, and San Francisco Fed President John Williams, a centrist, told reporters after a policy conference here that they would not want to risk unmooring the public's expectation that inflation will rise back to the Fed's 2 percent goal in the next few years. Chicago Fed President Charles Evans, one of the Fed's most ardent doves, echoed those sentiments. The role financial instability concerns should play in Fed policymaking has long been a subject of debate at the U.S. central bank.

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