Comments from Plosser in Philly:

  • Uncertainty over fiscal policy and regulation are contributing to sluggish growth
  • Growth in residential investments “encouraging”
  • Sees inflation moving toward 2% over next year
  • Lack of taper in Sept undermined Fed credibility
  • QE3 should end when fixed amount of purchases reached

That’s a new line from Plosser but Bernanke and the core of the Fed believe in the power of never outlining a clear plan so it’s highly unlikely.

Overall, the comments are hawkish but it’s no surprise since Plosser is one of the most hawkish Fed members.

The ‘transitory factors’ is a bit of puzzle. Inflation has been low for 5 years.