Federal Reserve Bank of Philadelphia President Charles Plosser said Friday that inflation levels that have fallen persistently short of where the central bank wants them to be are not a significant issue to him right now.
It’s true that inflation levels are “a little bit low” relative to the Fed’s desire to have price pressures hit 2%, Mr. Plosser said at an appearance in New York. But, “for the most part, I’m not too concerned about that,” he said.
Mr. Plosser was addressing the economy’s long-running inability to get inflation back toward levels the central bank would like to see. The weakness of inflation to reach that goal has proved problematic to officials, including Mr. Plosser, who believe the time is soon coming to raise rates.
In Mr. Plosser’s formal speech, he reiterated his belief that there are limits to what monetary policy can do for the job market.
“I fear that the public has come to expect too much from its central bank and too much from monetary policy, in particular,” Mr. Plosser said at the Society of American Business Editors and Writers Fall Conference.
He´s about to retire, but during all the years he was one of those in charge of monetary policy he never managed to understand what his job was about! Having failed, he now rationalizes it as “powerlessness”!
The contrast with 1997 Krugman is stark. For PK:
… Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God…