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Fed's Stein: Financial stability should inform policy

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[April 14, 2014]  WASHINGTON (Reuters)  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.

Turning to international financial stability, Stein said: "We have to be aware of it, we have to monitor it ... this is where communication is helpful and being attentive is helpful.

"Doing the right thing for the U.S. economy is ultimately helpful for larger parts of the world," he added.

(Reporting by Jonathan Spicer and Leika Kihara; editing by Leslie Adler)

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