Philadelphia Federal Reserve president Charles Plosser on Wednesday dismissed concerns of a strong U.S. dollar, saying monetary policy creates consequences and can distort asset prices but the Fed must focus on its mandate.
Plosser said exchange rate movements have historically not tended to affect U.S. inflation, which along with unemployment is the Fed’s “true mandate”.
“The Federal Reserve does not have a foreign exchange goal. I don’t see it (a strong dollar) as a significant risk at this point,” Plosser said, speaking at the UBS European Conference in London.
Turning to interest rates, Plosser, who is due to step down next March, said rates should start rising in the “not too distant future” as the U.S. economy is “way ahead” of where the Fed projected it would be.
“I would prefer that we start to raise rates sooner rather than later. 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,” he said.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.