Even the Federal Reserve official who is one of those most opposed to further financial easing by the U.S. central bank has thoughts about how the Fed ought to do it.
Philadelphia Federal Reserve Bank President Charles Plosser on Wednesday told reporters in Vineland N.J. that while he doesn’t think the economy is now in need of further Fed asset purchases, he would support such a move if a clear risk of deflation emerges.
The conditions Plosser set out for any eventual asset buying give a flavor of the debate at the Fed as it considers how to proceed with a renewal of quantitative easing, as the process of pushing additional reserves into the financial system by purchasing securities is called.
Plosser, a former economics professor and business school dean, is among the most inflation-focused hawks among Fed policy makers, and in spite of his views, most analysts believe critical mass has built at the Fed in favor of taking further steps to support the weak recovery.
If the Fed does decide to ease, it should be clear about why it is doing so and what it hopes to achieve, Plosser said.