The possibility of a US recession will put further pressure on financial markets in the coming months and push policymakers to implement regulatory reforms, former US Federal Reserve Chairman Paul Volcker said on Monday.
"I suspect the apparent need for intensive and broad reform (of financial markets) will be reinforced in the coming months by further financial pressures, pressures likely to arise from the slowing US economy and the possibility of recessionary tendencies," he said at a conference in Montreal.
Volcker said he hoped and expected the Fed to exercise "disciplined monetary management" to contain growing inflationary pressures. "The obvious inflationary pressures from the oil and agricultural markets and from the depreciation of the dollar is surely a challenge, a challenge that must be met," he said. He declined to comment on whether Fed Chairman Ben Bernanke should raise interest rates to fight inflation.
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