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Slowing U.S. Inflation Doesn’t Require Fed Response

Federal Reserve Bank of Philadelphia President Charles Plosser said a slowing in U.S. inflation to the lowest rate in more than three years doesn’t warrant a Fed policy response.

“Should inflation expectations begin to fall, we might need to take action to defend our inflation goal, but at this point, I do not see inflation or deflation as a serious threat in the near term,” Plosser said today in a speech in Stockholm.

Central bank officials including St. Louis Fed President James Bullard said last month persistent disinflation may require the Fed to provide stimulus beyond $85 billion in monthly bond purchases. Consumer prices rose 1 percent in March from a year earlier, the lowest level since October 2009, according to the Fed’s preferred gauge of inflation.

Bloomberg [1]

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