FRANKFURT (MNI) – Inflation in the foreseeable future is not a
concern, even if the Federal Reserve must ensure it keeps its reputation
for being able to control consumer price growth, Charles Plosser,
president of the Federal Reserve Bank of Philadelphia, said in an
interview published Wednesday.
“I have no worries about inflation in the foreseeable future,” he
told German financial daily Handelsblatt. The inflationary process,
however, “is very strongly associated with the credibility of the
central bank in controlling inflation,” and expectations mount if the
public loses confidence in monetary authorities.
“The Fed has a good reputation in controlling inflation,” he said.
“And we have to make sure that we keep it, too.”
The U.S. economy will return to growth of 2.5% to 3% next year, he
predicted, attributing the weak first half of this year to “clearly
identifiable causes” such as snowstorms on the East Coast, the
catastrophe in Japan, political revolt in the Mideast and the European
sovereign debt crisis.
The best thing the U.S. government can do is reduce uncertainty, he
said: “The government must convey to the public the feeling that in the
USA we have the budget situation under control.”
–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
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