Fed should stay focused on monetary policy: Treasury, Fed
Despite the recent wave of unconventional moves to help stabilize the U.S. economy, the Federal Reserve must not get sidetracked from its primary focus on monetary policy and should avoid actions that help specific economic sectors, the Fed and the Treasury said in an unusual joint statement on Monday.
Actions that the Federal Reserve takes, during this period of unusual and exigent circumstances, in the pursuit of financial stability, such as loans of securities purchases that influence the size of its balance sheet, must not constrain the exercise of monetary policy as needed to foster maximum sustainable employment and price stability, the two-page statement said.
The statement added that the U.S. central bank aims in the longer term to remove from the Fed's balance sheet the money provided to assist JP Morgan and American International Group.
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