Fed's Plosser Attacks 'Audit the Fed' Bill in Final Speech

Federal Reserve Bank of Philadelphia President Charles Plosser criticized a congressional proposal that could exert more political pressure on the central bank, joining colleagues in warning the move would harm the U.S. economy.

In his final speech as president, Plosser, an outspoken internal critic of Fed policies to spur U.S. growth which have drawn fire from some U.S. lawmakers, said such concerns warrant Fed accountability, but not less monetary policy independence.

Plosser said an “Audit the Fed” bill introduced by Kentucky Senator Rand Paul would repeal a provision insulating Federal Open Market Committee policy decisions from immediate investigation by the Government Accountability Office.

“This proposal to strike that exemption for monetary policy is an attempt to reduce the independence of the central bank through the threat of a political action in real time,” he said in the text of a speech to be delivered in Philadelphia.

Paul, a potential Republican presidential contender, in a statement last month said the Fed “operates under a cloak of secrecy,” and Americans “have a right to know what the Federal Reserve is doing with our nation’s money supply.”

The Fed has held interest rates near zero since December 2008 and more than quadrupled its balance sheet to $4.5 trillion with three rounds of bond purchases.

Passage of the bill could “change the dynamics of FOMC’s internal discussions and undermine the Fed’s credibility and its ability to conduct monetary policy in the long-term interests of the American public,” Plosser said.