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Why The Fed Inflation Hawk Plosser Didn't Vote Against QE2

Saturday, February 12, 2011 - 8:25 AM
Before the last FOMC meeting there were expectations that at least two of the new voting members who are known inflation hawks would vote against a continuation of the Fed's bond-buying program that's intended to drive down long-term interest rates (QE2). However, the decision to continue QE2 was unanimous.

This Reuters article describes an interview with one of these two members, Charles Plosser, who explained his vote:
he said credibility demands that the bank not "stomp on the brakes and then floor the accelerator."

Nevertheless, Plosser continues to be critical of QE2, and he "doesn't believe Fed policies can bring down unemployment rates." He also said he doesn't see any more risk of deflation.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
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