Fed's Lacker: populist anger against U.S. central bank part of 'healthy debate'

WASHINGTON (Reuters) - Richmond Federal Reserve President Jeffrey Lacker said on Thursday that he understood the backlash against the U.S. central bank and that public debate on its role is healthy.

But Lacker said a proposal floated by some Republican presidential candidates that the United States return to a gold standard would be "unworkable."

Given the Fed had more influence on the economy since the financial crisis than many people thought, such "populist anger" was not surprising, he said in comments to reporters after giving prepared remarks at the Cato Institute in Washington, D.C.

"For those who are apprehensive about the ... scope and the power of public sector institutions what we did in the crisis is bound to have been alarming, so I am not surprised by the quarters from which the most hostility and criticism comes," he said.

Lacker added he would support both making interest on excess reserves the responsibility of the Federal Open Market Committee, not just the Fed's Board of Governors, and more discussion in reports to Congress on the rules the Fed has considered in setting policy, and why it has deviated from them.

Lacker has twice voted this year to raise rates when the rest of his Fed policymaker colleagues decided to stay put, and is less concerned than many others on the committee about monetary policy's ability to influence inflation, which has been running below the Fed's 2 percent target rate.

Citing its "unique" ability in this regard, Lacker nevertheless said that the expected rate of monetary tightening after an initial rate hike was "likely to be gradual."

He also reiterated his view that the Fed should begin winding down its balance sheet as soon as possible after it begins to raise rates.

The Fed is seen by investors and watchers as likely to raise rates in December for the first time in almost a decade.

(Reporting by Lindsay Dunsmuir; Editing by Meredith Mazzilli)

You May Also Be Interested In

• Dollar slips ahead of US growth data; yen on intervention watch
• US Dollar to stay "stronger for longer" - Goldman Sachs
• Yen at multi-decade lows, dollar drops before US data