Richard W Fisher: Comments on tailored regulation and forward guidance (with reference to Dr Seuss, Strother Martin in Cool Hand Luke and other serious economists) Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Louisiana Bankers Association 114th Annual Convention and Expo, New Orleans, Louisiana, 9 May 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Drake (Mills). Your service as president of the Federal Reserve Board’s Community Depository Institutions Advisory Council is greatly appreciated. You are kind to have a Texan come speak to you and your fellow Louisiana bankers, though this is not without precedent: The great blues guitarist and singer Clarence Garlow may have been born in Louisiana, but he had long lived in Texas before he recorded “Bon Ton Roula” in 1949 and gave New Orleans the reputation of the American city where les bon temps rouler. It would be hard to say that the good times are rolling for community bankers, though the pace and rhythm of the economies of the U.S. and Louisiana and your next-door neighbor, Texas, are getting stronger daily. I have been outspoken as to why our community banks feel besieged. Everyone in this room and their sister or brother knows what I preach about the continuing problem of banks considered “too big to fail” and the witches’ brew that was concocted by Congress, known as Dodd-Frank.
And this left a more distinctive and clearly defined role for monetary policy as the primary instrument for maintaining broad balance consistently over time between aggregate demand and underlying supply. All this has become the accepted wisdom just about everywhere. Since 1992 in this country the explicit objective of monetary policy has been to achieve stability defined in terms of a target for retail price inflation. And since 1997 the Bank of England - through the Monetary Policy Committee - has been delegated responsibility for setting short-term interest rates with the consistent aim of hitting the Government's symmetrical 2½% inflation target (on a precisely defined measure of retail price inflation - RPIX). Now the reason we've been set that task is not - as some people imagine - because either we or the Government think that consistently low inflation is the be all and end all of economic life. It is because we learned from our earlier experience that consistently low inflation is a necessary (though not in itself a sufficient) condition for the sustained growth of output of the economy as a whole, for high levels of employment, and for rising living standards, which are more fundamentally the things that we are all seeking to achieve. "Stability is a necessary condition for sustainable growth" has become the universal central-banking credo. So our objective - and the reasons for it - could not be clearer. But meeting that objective is not as straightforward as it may sound.