Federal Reserve’s Plosser, Dissenter on Monetary Policy, to Retire

Philadelphia Federal Reserve President Charles Plosser, who has pushed the central bank to move more quickly to raise its rock-bottom interest rates, said Monday he would retire on March 1.

Plosser, known as an inflation hawk because of his view that the central bank must make avoiding the risk of soaring prices its top priority, has served this year as a voting member of the policymaking Federal Open Market Committee.

He has dissented to the last two monetary-policy statements from the committee, led by Fed Chair Janet L. Yellen, including last week’s. Yellen and the majority of the committee have said rates must remain low because the labor market has not fully recovered from the Great Recession.

Plosser is one of four regional Fed presidents who rotate annually onto the committee. Next year, he would be neither a voting member nor an alternate.

A longtime economics professor at the University of Rochester, Plosser took over leadership of the Philadelphia Fed in 2006.

His tenure included the tumultuous years during and after the recession and financial crisis, when the Fed took unprecedented steps to avoid a global meltdown and to try to stimulate the economy.

“For more than eight years, I have had the honor to work alongside many talented colleagues here at our bank and throughout the Federal Reserve System during an extraordinary period in this nation’s economic history,” Plosser said Monday.

In the last two policy statements, Plosser has objected to so-called “forward guidance” that the Fed plans to keep its benchmark short-term interest rate near zero for “a considerable time” after the central bank ends its bond-buying stimulus program next month.

Explaining his July dissent, Plosser said the economy had improved significantly this year and inflation was rising toward the Fed’s annual target of 2 percent.

“Thus, given the clear progress we have made toward achieving our long-term goals over the past year, and the progress and momentum that appears to be building in the economy and in the broader labor market, I no longer believe that the forward guidance language in the statement is appropriate or warranted,” he said.

Plosser was the only dissenter among the 10 committee members who voted on the July monetary-policy statement.

In dissenting for the same reasons to last week’s statement, Plosser was joined by Richard Fisher, President of the Federal Reserve Bank of Dallas.

Despite the dissents, Yellen praised Plosser Monday, calling him “an insightful and dedicated leader and colleague in the Federal Reserve System.”

“My colleagues and I will miss his keen insights, deep analysis and good humor,” she said.

President Obama does not choose a successor. The 12 regional Fed presidents are chosen by each bank’s board of directors with approval from the central bank’s Board of Governors in Washington.

This article appeared in print in the September 23rd, 2014 edition of Hamodia.