The government must impose regulatory reform of some type when the markets return to normal, Federal Reserve Bank of Philadelphia president Charles I. Plosser said yesterday. He added that while he doesn’t believe deflation is a serious threat to the U.S. economy, having the Fed announce an inflation target would be helpful.

Plosser said the Fed will need to withdraw the vast amounts of liquidity it has injected into the economy once markets stabilize if it’s to avoid an inflation flare-up.

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