You're watching...
Federal Reserve Bank of Philadelphia President Charles Plosser weighs in on the European debt crisis, the latest FOMC meeting and the U.S. economic re...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- twenty.
Not job creation he just wrapped up a speech in Philadelphia.
At fox business's Peter Barnes is there with an exclusive interview but -- -- -- -- Carol thank you we are joined by president Plosser right now welcome to Fox Business president -- Wanna talk first about the news of the day in -- speech last month you've said quote perhaps the greatest uncertainty today.
That today surrounds the outcome.
A financial events in Europe the sovereign debt crisis is not resolved.
And today well that's hard to say it's probably somewhat culture -- read that they've made some progress but there's still lots of questions to be answered lots of challenges to be face.
Let's hope they're closer and -- get resolved in a timely fashion what should they be doing in -- -- Oh well I'm not gonna prescribed to them what but they should be doing it that it's a serious challenge they have.
It's a lot of it's a political challenge because this is about.
Losses sovereign debt losses making losses other types of losses in.
And it's about who's gonna pick up the tech support at the end of the day becomes very political process a long drawn out debate.
Somewhat somewhat like the ones we've had in this country about the same sorts of issues.
-- trillion or two trillion dollar question -- on the numbers you look.
Let's talk about the last FOMC meeting last week.
In the prior prior to meetings you had dissented.
You were among the three dissenters on further stimulus for Operation Twist for extending the interest rate guidance through -- keeping them low through mid 2013.
But at the last meeting you did not to -- you actually voted with the chairman on that why is that well I think it's fairly straight forward I think.
The committee makes decisions.
It is a committee decision the majority.
Prevails then I made my views known about my views of both the economy and sort of the state state a policy.
And we didn't take any further actions and so I felt like it wasn't appropriate to re -- in -- in some sense that the decisions the previous decisions have been made.
But I also say that.
It's important that the committee have credibility and that.
I support the Canadian dysfunction in the comedian might and again my views were known so.
I didn't see any point in changing the stance of policy I think it's dangerous for policy to be jerked around for meeting the meeting.
And so I would prefer that.
That if we do weren't taking more action to make -- to just stand pat and not -- What would it take for you to take further action right right now you you don't think we need any additional us stimulus any quantitative easing.
QE3 anything like that at this point.
I don't I don't see that right now I think I think a lot of volatility that we in the concerns that we had in July and August and September.
If you particular if you look at the GDP numbers that came in the employment numbers in the revisions to the employment numbers.
The fear that a lot of people had back in August and September that the economy was at risk of falling off a cliff.
Those are pretty much been dissipated at this point it's not that we're going.
A great guns so to speak we'd all like -- growing faster but the underlying path of the economy of the slow modest recovery seems to be still and train.
So I don't see things that.
Calls for further stimulus at this point but you are watching Europe and the potential for.
The committee has said significant downside risk current events and -- well sure that the risk that the biggest risk that I'll stand by what I said even a month ago and that is that the biggest.
Underlying risks to the economy right now is.
What happens in Europe and figuring out how that affects us because we don't really know for sure how that affect us that is that is a big risk.
Domestically what we see with the employment numbers in the GDP numbers do things is that we still on this sort of steady.
Low growth recovery which is not satisfactory or not very appealing but it's still there.
Your speech today it was perhaps the most forceful I've seen so far from you on this issue -- more transparency.
A more can better communication.
From the Fed in its policy may making and the direction of its policy what do you want to see the Fed do.
Well I have three suggestions in my speech I make three point one is I think.
We need to sort of be explicit about what our inflation objective is and admit that we have an objective and and commit to it and that's important.
Concept both in central banking and for policy making to be effective.
The other suggestion -- as it is that we should use forward guidance that is indicating to the public what future rate paths will be.
Use our projections.
That we already collect.
Within the FOMC.
-- what we call appropriate policy.
And use that can reveal that information instead of picking time dates like the 2013.
-- using extended language that's a more -- Using our projections as a more transparent way of conveying information so I think that would be more effective and and now.
And more transparent and important for policy.
The third.
That govern our policy make some people talk about rules and other things what we can talk about the variables that are important that we look at.
And then count our decision making me make a decision.
Report to the public well it's because these things did this that or the other this is our view this is how the variables reflected.
And our policy choices.
And to be more transparent about how we make decisions in the things that are important to us I think those sorts of things are important part of both our.
Are being affected -- policy but also.
Being transparent to the public about what we're doing because that transparency actually makes our policies work better.
Hold that thought because I wanna continue this discussion with you for and the rest of our -- which will appear on our website foxbusiness.com.
A little bit later this afternoon and Charles we're gonna follow up on those on that question and and issue and others with -- Federal Reserve Bank president.
A Charles Plosser of Philadelphia Charles.
Paying it back to you.
It's been fantastic so far thank you very much Peter Barnes.
But Philadelphia Federal Reserve Bank president --
