“The Federal Reserve announced Thursday that economist Jeremy Stein is resigning from the central bank’s board of governors after a two-year stint that established him as a leading voice on the unintended consequences of the Fed’s easy-money policies.”
“Stein will step down May 28 to return to teaching at Harvard University. He has been on leave from the college since joining the Fed in 2012. He also previously served in the Obama administration as a senior adviser to the Treasury Secretary and on the staff of the National Economic Council.”
“Stein arrived at the central bank shortly before it launched a new effort to jump-start the recovery by pumping money into the economy. It has bought more than a trillion dollars in bonds to push down long-term interest rates and has pledged to keep interest rates low for years to come.”
“Though Stein never dissented from the Fed’s decisions, he was a leading proponent of the argument that years of rock-bottom interest rates were causing investors to “reach for yield” through increasingly risky assets that had the potential to destabilize the financial system. He also said the Fed should consider raising interest rates to combat such excesses — a highly controversial proposal that has become a flash point within the central bank.”
Read full Washington Post article here.