Fed’s Lacker: constructive ambiguity is unworkable
Jeffrey Lacker, the president of the Richmond Federal Reserve, on Friday said banks' manipulation of ambiguity surrounding state-funded safety nets was unworkable and would be defeated by rational expectations.
Speaking at an event in Kentucky, Lacker said: "The difficult dilemmas that policymakers faced in the fall of 2008 were in part the legacy of a financial safety net policy that ultimately proved unworkable. Often referred to as ‘constructive ambiguity', this approach encouraged financial
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