The Federal Reserve should start selling some non-Treasury assets “sooner rather than later” since they wouldn’t disrupt recovering financial markets, Federal Reserve Bank of Philadelphia president Charles Plosser said Friday.
“Despite recent volatility in markets due to fiscal deficit problems in Europe, financial markets are now functioning much better than they were during the height of the financial crisis, and I believe the Fed could begin to liquidate its positions gradually without market disruption,” Plosser said at a Blair County, Pa., Chamber of Commerce breakfast, according to a prepared text of his remarks released by the Fed.
“If we do not exit from this strategy in a timely manner, we could be sowing the seeds of another round of uncomfortable and costly inflation in the intermediate term,” he said.
