Former NY Fed President Bill Dudley on monetary policy
Former NY Fed President Bill Dudley says Federal Reserve has done what i can do and has shown spotlight on fiscal policy.
Video Transcript
BILL DUDLEY: I think they're just saying what's obvious, that monetary policy can only do so much. I mean, monetary policy can reduce the level of interest rates. And monetary policy, as we've seen, can restore market function. And the Fed has done both of those things. But that's, sort of, it.
The Federal Reserve cannot create income. And only Congress can do that through fiscal support. And the coronavirus is about forces that are pushing down business activity, which has a depressant effect on income. And it's also causing a lot of business failures that's also going weigh on the economy going forward. And the Fed can't do much about that.
So I think the Fed has properly shown the flashlight on the need for fiscal policy, that monetary policy can only do so much. I think it would be problematic for the Fed if they didn't say anything. Because then, the Fed would be somehow implying that they can take care of the entire problem when they can't.
