Fed’s Lacker issues warning on bloated balance sheet


The president of the Federal Reserve Bank of Richmond, Jeffrey Lacker, spoke on January 8 about the looming challenges the Federal Reserve System is facing as a result of its $85 billion monthly asset purchases.

Despite agreeing with forecasts putting inflation at just under 2% in 2013, Lacker said he was concerned about the longer-run inflationary impact of the Fed's balance sheet expansion.

"The larger our balance sheet, the more vulnerable we will be to seemingly minor miscalibrations in

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