Fed's Lacker cites inflation concerns for dissent

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Associated Press

Posted on June 22, 2012 at 10:00 AM

Updated Friday, Jun 22 at 11:00 AM

WASHINGTON (AP) — The Federal Reserve official who dissented from the central bank's latest effort to support to the economy says he objected because he doesn't think it will do much to boost growth. And he says it will raise the risk of inflation.

Jeffrey Lacker, president of the Richmond regional Fed bank, cast the lone dissent in the Fed's 11-1 decision Wednesday to extend Operation Twist for another six months. Under the program, the Fed is selling short-term Treasury securities and buying longer-term securities. By doing so, the Fed hopes to drive long-term rates lower and encourage more borrowing and spending.

Lacker says the outlook for growth has clearly weakened in recent weeks. But he said the solution to the slowdown is beyond the Fed's abilities to resolve without increasing inflation.

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