- Fed Governor Christopher Waller said the central bank is not keeping rates low to help the government roll up more debt.
- That narrative “is simply wrong,” the central bank official said in his first public remarks since being confirmed in December.
- Government debt has jumped nearly 20% during the Covid-19 pandemic, and the deficit for this fiscal year is on track to easily exceed $2 trillion.
The Federal Reserve is not keeping monetary policy easy to enable the government to rung up debts and deficits, Fed Governor Christopher Waller said Monday.
Defending the Fed’s independence from the fiscal authorities in Congress, Waller rejected notions that the central bank is holding borrowing costs low to help service the debt or that it is conducting asset purchases to finance the debt-laden federal government.
“My goal today is to definitively put that narrative to rest. It is simply wrong,” Waller said in prepared remarks to the Peterson Institute for International Economics. “Monetary policy has not and will not be conducted for these purposes.”
As part of its Covid crisis response, the Fed cut short-term borrowing rates to near zero and has been buying at least $80 billion of Treasurys each month, along with $40 billion of mortgage-backed securities.
At the same time, total government debt has soared by $4.5 trillion, or nearly 20%, since early March 2020, and the deficit for fiscal 2020 was more than $3.1 trillion. The Congressional Budget Office has projected the fiscal 2021 shortfall to be $2.3 trillion, and that doesn’t include the nearly $1.9 trillion stimulus package approved recently.
News Source:- Cnbc