Independence Crucial to Monetary Policymaking: Atlanta Fed President
Setting monetary policy is most effectively done in an apolitical environment, Atlanta Fed President and Chief Executive Officer Dennis Lockhart said in a recent speech to the Downtown Atlanta Rotary. Lockhart was commenting on recent legislative proposals that would subject the Fed's policymaking decisions to audits and potential political pressure. "Monetary policy should not swing with the daily news or be influenced by short-term political pressures," he said.
Staying on course requires independence
Making politically unpopular decisions is essential to policymaking
On retaining the Fed's regional structure
"From its inception, the Federal Reserve System was designed to have checks and balances, to avoid concentration of power in New York and Washington, and to give every region of the country an apolitical voice in policy formulation," Lockhart said. Describing the Atlanta Fed's far-reaching network developed to gather data from throughout the Southeast, Lockhart spoke of the importance of preserving citizens' input. "We have worked hard to democratize the region's input on national policy decisions through aggressive outreach to business and other leaders," he said.
Closing his remarks, Lockhart said he understood the impulse driving some of the regulatory reform discussion. "The country is just now emerging from a long and painful recession caused largely by a crisis in our financial system," he said. "We need to fix things, but purported reforms that weaken how the country's economic affairs are governed will be harmful and tough to undo. This debate is not a remote political one. It's a Main Street issue."
January 28, 2010