Plosser Says 2010 GDP Outlook "Somewhat Lower Than What It Was", Sees Very Limited Amount Of Things That Can Be Done To Improve Economy
After earlier saying in prepared remarks that "based on my current outlook, I do not support
further asset purchases of any size at this time," Philly Fed President Charles Plosser has confirmed he is firmly in the anti-QE camp of Fed members. And as remarks from the Q&A following Plosser's speech hit the tape, we discover just how ugly the situtation in America's economy truly is. Among the soundbites, Plosser has said that there is a "very limited amount of things we can do at this point", noted that he is "worried about the downside of further easing", says that the doesn't see "deflationary expectations emerging" , and, last but not least, tells everyone else after Fashion Island apparently already was well aware of all this weeks ago, that the 2010 forecast is "somewhat lower than what it was." This statement validates Kocherlakota's reduction in his 2011 GDP forecast earlier from 3% to 2.5%, which we discussed previously.
Some more observations on his prepared remarks earlier via Reuters:
Plosser acknowledged that growth has moderated, and that inflation has been subdued. However, he said he expects inflation expectations to remain stable and does not see a significant risk of sustained deflation.
Plosser said he opposes asset buying under current conditions because he worries policymakers would squander public confidence in the Fed's ability to combat deflationary expectations by acting prematurely.
Also, he said, it is difficult to see how additional asset purchase could have much impact on the near-term outlook for unemployment.
Plosser has been outspoken in expressing concern about the massive expansion of the Fed's balance sheet, which has doubled from pre-crisis levels as a result of recession-fighting efforts.
Unfortunately, as Plosser is not a FOMC voting member, the fate of the middle class remains in the hands of a few psychopaths and Tom Hoenig, who unfortunately is unable to make more friends among the other voting "doves."