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Fed's Stein: Financial stability should inform policy

"A top Federal Reserve policymaker on Sunday repeated his controversial assertion that financial stability should be an aim of U.S. central bank policymaking.

"Jeremy Stein, a Fed governor who is resigning next month, told an International Monetary Fund forum there is a need "in principle" to incorporate the aim of financial stability into monetary policies. Less clear, he said, is how to "operationally" incorporate it into policy.

"Stein has pushed this idea for more than a year. It runs against the traditional concept of adjusting interest rates to target inflation and unemployment, and separately, using regulation and supervision to ensure the financial sector is stable.

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