Fed's Lacker highlights 'critical, misconstrued' distinction between monetary and credit policy

‘Living wills' would put ‘credible limits' on central bank intervention


Distinguishing between monetary policy and credit policy is "critical" when thinking about central bank lending, but justifications for the Federal Reserve's financial crisis lending – and its role as lender of last resort more broadly – seem to misunderstand this distinction, Federal Reserve Bank of Richmond Jeffery Lacker said in a speech on Friday.

"Central bank actions constitute monetary policy if they alter the quantity of its monetary liabilities," Lacker said. "Central bank actions

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