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Fed's Evans: don't use rate policy to fight instability
May 30, 2014 / 6:47 PM / 3 years ago

Fed's Evans: don't use rate policy to fight instability

Chicago Federal Reserve Bank President Charles Evans speaks during the Sasin Bangkok Forum July 9, 2012. REUTERS/Sukree Sukplang

(Reuters) - The Federal Reserve should not use monetary policy tools to address financial stability risks, a top Fed official said, pushing back against a rising tide of support, both within and outside of the U.S. central bank, for doing just that.

“Degrading monetary policy tools to mitigate financial instability risks would lead to inflation below target and additional resource slack,” Chicago Fed President Charles Evans said in slides prepared for presentation at a conference in Istanbul on Monday. The slides were released by the bank on Friday.

Regulations, oversight, and market discipline should instead be used to rein in risk-taking, Evans said.

Reporting by Ann Saphir; Editing by Chizu Nomiyama

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