Need to Keep Policies Separate, Plosser Says

The Federal Reserve’s ability to accomplish its dual mandate could be “undermined” by blurring the lines between monetary, fiscal, and credit policy, Federal Reserve Bank of Philadelphia president and chief executive Charles Plosser said Friday.

“Monetary policy should not be used to solve a fiscal crisis,” he told the Monetary Policy Forum, according to prepared text of his speech that was released by the Fed.

“The ability of the central bank to maintain price stability can also be undermined when the central bank itself ventures into the realm of fiscal policy,” Plosser said.

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