UPDATE 1-Volcker – higher inflation target idea "nonsense"

* Says euro countries ready for challenge of Greece crisis

* Says US banks not yet healthy, repair work has just begun

(Adds quote on U.S. banks, background)

BERLIN, March 8 (BestGrowthStock) – The idea, floated by IMF
economists, that central banks could raise their inflation
targets is nonsense, White House economic adviser Paul Volcker
said in a German newspaper interview published on Monday.

A research paper by International Monetary Fund staff last
month raised the idea that policymakers might consider raising
the 2 percent inflation target chosen by many central banks to 4
percent. [ID:nN12186196]

“That is simply nonsense,” Volcker told the Frankfurter
Allgemeine Zeitung.

Asked whether the euro was under threat from speculation
against Greece and other countries, Volcker said: “It is a
challenge but the euro countries will be ready for it.”

Turning to the U.S. financial sector, Volcker said U.S.
banks were not yet healthy. “The repair work is still running.
It has just begun.”

Known for vanquishing stagflation during the Carter and
Reagan administrations, the 6-foot-7-inch Volcker commands deep
bipartisan respect.

In January, President Barack Obama stunned markets with a
three-part proposal to limit banks’ proprietary trading, get
them out of the hedge fund and private equity business, and
limit their future growth through a new market share cap.

The proposals became known as “the Volcker rule” and
Congress is still figuring out what to do about it.

Asked if Europe should copy his proposals, Volcker said: “I
wouldn’t say copy. We should reach a joint agreement on what the
appropriate solutions are.”

Stock Market News

(Writing by Paul Carrel; editing by Patrick Graham)

UPDATE 1-Volcker – higher inflation target idea “nonsense”