Federal Reserve Bank of Philadelphia President Charles Plosser said in a speech in Florida that the US economy has “moved much closer” to the Fed’s goals and keeping rates near zero until achieving them is a “risky strategy”:
- The Federal Reserve can’t be certain whether full employment has been reached
- Waiting for the labor market to fully heal before raising the main rate risks a sharper increase in borrowing costs later
- “I would prefer that we start to raise rates sooner rather than later”
- “This may allow us to increase rates more gradually as the data improve rather than face the prospect of a more abrupt increase in rates to catch up with market forces, which could be the outcome of a prolonged delay in our willingness to act.”
More detail at Fed’s Plosser Says Keeping Rates Low Is ‘Risky Strategy’
