HELSINKI, Finland — Last Friday’s weak employment data does not change the medium-term outlook for the U.S. economy, and it is possible the Federal Reserve will raise interest rates by the end of the year, Federal Reserve Bank of Philadelphia president Charles Plosser said Monday.

“Tighter monetary policy by the end of the year is certainly possible,” Plosser, a voting member of the Federal Open Market Committee, said in a press conference on the sidelines of a conference in Helsinki.

He said it was important to determine whether the cause of the current economic situation is indeed transitory. “I will be looking closely at inflation, inflation expectations, and the evolution of the economy,” he said.

Plosser argued that the Fed’s near-zero rate policy was taken advantage of by some investors in a way that could threaten to create asset bubbles. “The risk is that we’ll see the same problems happening again,” he said. “There is only one direction for interest rates, and that is up.”

Still, “the inflation threat is not next month or the month after,” he said. “It’s next year, or after.”

Asked whether another round of quantitative easing — a QE3 — was possible, Plosser said: “What I’ve learned during this crisis is, never say never.”

However, “the hurdle rate for doing more [accommodation] is really high,” he added.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.