The nation needs to be aware of inflation while monetary policy remains “very accommodative,” Federal Reserve Bank of Philadelphia president Charles Plosser said Wednesday.
In addition to weaker-than-forecast growth in 2011, overall inflation was 3%, above the 2% Plosser said he expected, mainly from large increases in food and energy prices early in the year. Core inflation was up 2.2%. Plosser said he expects inflation to moderate in the near term.
“I believe we must continue to monitor inflation measures very carefully,” he told the Main Line Chamber of Commerce, according to a text released by the Fed.
“Inflation most often develops gradually, and if monetary policy waits too long to respond, it can be very costly to correct,” Plosser warned.
He dissented from Federal Open Market Committee decisions in August and September, saying, “it was not clear to me that further monetary policy accommodation was appropriate.”
Plosser objected to the Fed’s recent announcement that rates would remain exceptionally low through late 2014, based on “similar reasons.”
