Philadelphia Fed President Charles Plosser, in prepared remarks on Saturday, said:

  • The Great Recession could have done permanent damage to potential U.S. output:

“The shock that hit the economy appears to have had very persistent, if not permanent, effects. From a statistical perspective, the economy appears to have taken a permanent hit to the output level.”

And that he is skeptical of the “optimal control” approaches to monetary policy (mathematical models are used to predict when unemployment and economic growth will return to more normal levels):

“A robust, systematic approach to policy, which is transparent and minimizes the degree to which data mismeasurement and model uncertainty affect policy, is the most promising approach to the uncertainties facing policymakers in real time,”

More detail

Friday comments from Plosser, here and here, and more from Lacker and from Bernanke, and Bernanke again on Friday.

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More from Plosser:

  • Fed could cut QE by larger than $10bn a month increments if economic data improves
  • Sooner bond-buying ends the better, he was please with the December taper
  • FOMC still debating possible rules for trimming back QE