Tags: charles | plosser | Fed | tightening | Strategy

Plosser: Fed Must Clearly Explain Its Tightening Strategy

Monday, 10 May 2010 04:01 PM

Philadelphia Federal Reserve President Charles Plosser said on Monday the Fed must better articulate its strategy for future moves away from interest rates that are currently close to zero.

Asked on CNBC television whether he would support Kansas City Federal Reserve President Thomas Hoenig's call to begin moving the policy rate up to one percent over time, Plosser said he was "not sure I would take that step right now."

"But I am certainly am prepared to say that we need to better articulate what that strategy is and what it will take for us to begin to move," Plosser said.

"I think there are legitimate issues that say being at the zero bound is problematic, it creates other distortions in the marketplace."

Plosser, who does not have a vote on the policysetting Federal Open Market Committee, added that there could be some benefit to starting to move "a little bit away" from zero-bound rates, such as gauging the market's reaction.

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