FEDERAL RESERVE/NOMINATIONS/TRUMP AS PRESIDENT: “Federal Reserve Board nominee Marvin Goodfriend on Tuesday [1-23-18] defended his past focus on inflation, saying that while earlier warnings about runaway prices were ‘absolutely’ proved wrong, it was the Fed’s credibility in controlling inflation that has allowed unemployment to fall so low.
In contrast to warnings that low interest rates might lead to a dangerous breakout of inflation, Goodfriend said he felt current Fed policy ‘is more or less on the right path going forward….We should get to 2 percent (inflation) in a year or so’ with unemployment at a 17-year low.
Goodfriend, a Carnegie Mellon economics professor chosen by President Donald Trump to join the Fed, faced sharp questions from Democrats on the Senate Banking Committee about remarks made in the wake of the 2007 to 2009 financial crisis in which he warned Fed efforts to drive unemployment even below levels as high as 7 percent might cause prices to spike.
Goodfriend was not alone in raising such concerns at the time, and by 2015 was worried that the Fed had done too little to boost inflation, and cautioned against raising rates too fast.
But as recently as last year he called the Fed’s dual unemployment and inflation goals ‘incoherent,’ a remark that caused Democrats to ask him if he had made a ‘confirmation conversion’ in accepting the Fed’s employment goals to win their support… Still, his track record left some Democrats wary.”
-Howard Schnieder and Jason Lange, “Fed nominee Goodfriend: Current Fed policy ‘more or less’ on right course,” Reuters, Jan. 23, 2018 08:45am