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Philadelphia Federal Reserve President Charles Plosser speaks at an Economics21 event in New York, March 25, 2011.
Credit: Reuters/Brendan McDermid
(Reuters) – The head of the Philadelphia Federal Reserve said on Tuesday at this point he would not want to say that the central bank would not sell assets in the years ahead.
Charles Plosser, a hawkish Fed policymaker, gave a speech in Beijing that was very similar to one given in Hong Kong last week in which he pitched a plan for returning the central bank’s balance sheet to a more normal size around $ 1 trillion, from $ 3.2 trillion now.
But he took a step further on Tuesday in arguing against the possibility that the Fed could simply allow its massive stable of assets to mature, instead of selling them later this decade.
“We have little theory or evidence to guide us in establishing a priori the most desirable path of sales. As a result, I am uncomfortable declaring at this point that we would not engage in sales,” Plosser, who does not vote on policy this year, said in prepared remarks at Tsinghua University.
The Fed “will need to fully consider the implications of maintaining a large balance sheet as it navigates its exit from the extraordinary monetary policy accommodation it has applied over the past five years,” he said.
As it stands, the Fed is buying $ 85 billion in bonds per month to help along the U.S. economic recovery. Fed policymakers are discussing adjusting an existing plan for reducing the balance sheet, though no decisions have been made.
(Reporting by Jonathan Spicer; Editing by Diane Craft)
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Fed"s Plosser pushes back on "no sale" assets policy
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