Stanley Fischer, U.S. President Barack Obama’s pick for the No. 2 spot at the Federal Reserve, dove in Wednesday to one of the most important debates at the U.S. central bank, as he called for making financial stability an “explicit” policy focus.
The Fed is mandated by Congress to pursue just two goals, maximum employment and price stability, but since the 2007-2009 recession has increasingly taken on responsibility for battling cracks in the financial system.
“Almost always, these goals are complementary,” Fischer said in written testimony released on Wednesday for a U.S. Senate confirmation hearing set for Thursday. “But each of them must be an explicit focus of Fed policy.”
The former chief of the Bank of Israel was chosen to be Fed Chair Janet Yellen’s second-in-command in part for his crisis-management credentials, especially during a seven-year stint as the No. 2 official at the International Monetary Fund.
In his remarks, he also expressed support for Yellen’s policy of continued monetary accommodation to bring down overly high unemployment and boost uncomfortably low inflation, “even though the degree of expansion is being gradually and cautiously cut back” as the Fed trims its massive bond-buying program.
Outside of those brief comments, Fischer’s prepared remarks provided few new clues on his outlook for monetary policy or the economy, and investors will watch closely his testimony before the U.S. Senate Banking Committee on Thursday, set to begin at 10 a.m. ET.
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