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The Fed: Fed’s Lacker wants central bank to be ‘preemptive’ like 1994

Bloomberg

Richmond Fed President Jeffrey Lacker

The Federal Reserve should adopt a strategy of raising interest rates before inflation moves higher like it did in 1994, said Richmond Fed President Jeffrey Lacker on Tuesday.

“While inflation pressures may seem a distant and theoretical concern right now, prudent preemptive action can help us avoid the hard-to-predict emergence of a situation that requires more drastic action after the fact,” Lacker said in a speech in Charleston, West Virginia.

He noted that in early 1994 former Fed Chairman Alan Greenspan decided to raise interest rates even though core inflation was only running at a 2.2% annual rate and had been drifting lower.

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