G*********8 发帖数: 644 | 1 Dec. 22 (Bloomberg) -- The Federal Reserve may need to slow or stop its
purchases of U.S. Treasuries in response to an accelerating U.S. economy
next year, Philadelphia Fed President Charles Plosser said.
“If the growth rate of the economy continues to strengthen and looks
sustainable, then I am going to be looking for the Fed to react to that,”
Plosser said today in an interview on Bloomberg Radio’s “The Hays
Advantage,” with Kathleen Hays. “That may be to cut back on the degree of
accommodation in a gradual way. One way would be to begin stopping some of
the purchases or slowing them down.”
Plosser, 62, who votes on monetary policy next year, said he might have
dissented from the Fed’s affirmation last week of a plan to buy $600
billion in Treasuries, asserting the purchases may spark inflation and
damage the central bank’s credibility.
Chairman Ben S. Bernanke is trying to boost growth after near-zero interest
rates and $1.7 trillion in securities purchases helped pull the economy out
of recession without bringing down joblessness close to a 26-year high.
Asked how he would have voted, Plosser said, “It would have been a close
call. The stronger the economy gets, the more attention I am going to be
paying” to whether to “begin reducing the amount of accommodation.”
As part of next year’s rotation, Plosser and the heads of the Dallas,
Chicago and Minneapolis Fed banks will cast votes. The leader of the New
York Fed has a permanent vote.
Inflation Accelerating
Plosser, in an interview at the Philadelphia bank, forecast that the U.S.
economy will expand 3 percent to 3.5 percent next year, with inflation
accelerating to as much as 2 percent.
“The economy is still in the midst of a modest recovery,” Plosser said. “
My confidence in the fact that it is sustainable is growing and has been
over the course of the year. In a fundamental way, I think it is sustainable
, but it is not going to go like gangbusters.”
Plosser indicated he was sympathetic to the position of Kansas City Fed
President Thomas Hoenig, who last week voted against Fed policy for the
eighth straight time. Hoenig reiterated his view that the “continued high
level of monetary accommodation” may eventually “destabilize the economy,
” according to a statement by the Fed after a Dec. 14 meeting by the Open
Market Committee.
Bond purchases by the Fed “could be destabilizing in a couple ways,”
Plosser said. While Hoenig has cited concern over “bubbles and distortions
in the economy,” the Philadelphia Fed leader said excessive inflation could
disrupt the economy as much as it did in the early 1980s.
‘Very Destabilizing’
“That can be very destabilizing to the economy if we lose our credibility,
” he said. “That is what we need to keep uppermost in our mind because the
consequences of losing our credibility can be very destabilizing.”
Plosser said he didn’t believe quantitative easing would do much to reduce
unemployment. It is “dangerous” for central bankers to be overly focused
on short term goals when policy affects the economy with a time lag, he said.
Plosser dismissed concerns about the risk of a broad-based decline in prices
. Policy makers including St. Louis Fed President James Bullard have warned
of a risk of Japanese-style deflation in the U.S.
“I am not really concerned about deflation,” he said. “Inflation is not
in a bad place right now. Low inflation is not a bad thing.”
Smallest Gain
The Fed’s preferred price measure, which excludes food and fuel, was up 0.9
percent from a year earlier in October, the smallest gain since records
began in 1960. Fed policy makers have a long-run goal of 1.6 percent to 2
percent inflation they see as consistent with achieving legislative mandates
for maximum employment and stable prices.
Plosser said he hasn’t made big adjustments to his growth estimates
recently because he always expected the slowing growth in the middle of 2010
to be a “soft patch” that wouldn’t last. “I think we are seeing
ourselves coming out of that,” he said.
Economists in the past two weeks have boosted projections for fourth-quarter
growth after the government reported better- than-projected retail sales
for November and the Obama administration reached a compromise with
congressional Republicans to extend Bush-era tax cuts and introduce new
reductions.
Economists Michael Feroli of JPMorgan Chase & Co. and John Silvia at Wells
Fargo Securities LLC now expect 3.5 percent growth in the final quarter. The
economy expanded at a 2.6 percent pace in the third quarter, according to
revised Commerce Department data. |
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