Fed's Plosser continues to criticise Fed move

Date: Wednesday 01 Feb 2012

Phildelphia Federal Reserve president Charles Plosser gave a speech in Gladwyne, Philadelphia, where he presented his forecast for this year. Plosser expects annual growth to speed up gradually to around 3% in 2012. He believes that the jobs market outlook will continue to improve with stronger employment growth and a gradually falling jobless rate in time.

Plosser said that inflation will remain relatively stabile but "given the very accommodative monetary policy that has been in place for more than three years, I believe we must continue to monitor inflation measures very carefully," he said.

Once again, Plosser criticised the Fed's strategy to schedule its exceptionally low rates. "Such statements are, in my mind, particularly problematic from a communications perspective... Monetary policy should be contingent on the economic environment and not on the calendar."

Plosser expressed concern about the statement being misinterpreted as a commitment. "There continues to be confusion and the confusion stems from our statement," he said.

FM

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