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Plosser says Fed policy guidance risks stoking inflation
Federal Reserve Bank of Philadelphia President Charles Plosser said the Fed risks stoking inflation by providing guidance that only partly describes how the central bank will alter policy in response shifts in the economy. “Forward guidance may risk unanchoring longer-term inflation expectations,” Plosser said today in the text of remarks prepared for a speech in Stanford, California. The Fed should identify “the key economic variables on which we base our policy decisions and then frame the rationale for any change in policy around changes in these key variables.” The central bank in December linked the ... (full story)