Fed’s Plosser: Keeping Rates Low Is ‘Risky Strategy’

Federal Reserve Bank of Philadelphia President Charles Plosser said the economy has “moved much closer” to the Fed’s goals and keeping rates near zero until achieving them is a “risky strategy.”

The central bank can’t be certain whether full employment has been reached, and waiting for the labor market to fully heal before raising the main rate risks a sharper increase in borrowing costs later, Plosser said in a speech today in Amelia Island, Florida.

“I would prefer that we start to raise rates sooner rather than later,” Plosser said. “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.”

Bloomberg

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