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Back -- Charles Plosser the president of the Federal Reserve Bank of Philadelphia and a voting member of the FOMC this year are welcome back president Plosser.
Let's continue on your speech which called for more transparency more disclosure.
Of fed policy and fed policy making.
How would that create better policy and how would that help the economy.
Well policy making in itself well that's fed policy here any kind of policy creates its own form of uncertainty when people don't know the rules of the game don't know.
What's likely to transpire.
Many people -- plan have to plan ahead whether be tax policy monetary policy to plan ahead to make decisions today.
So good policy is a policy that makes that future.
Less -- -- reduces the volatility future policy actions makes it somewhat more predictable -- never going to be.
Guaranteed because the world changes -- as we all know.
But we can provide more guidance and more instructions as to how at least -- monetary policy we think about those decisions being made.
Some people call it a reaction function some people call -- different things.
But the more guidance in the more clarity.
We can offer.
About how policy is decisions we'll leave law as the economy involved the more on the -- certain.
Economic agents are today they can better plans.
And it's just a better way to conduct policy.
We get less volatility.
And more growth.
So for example a year talking about -- if they target inflation rate potentially have some kind of around 2%.
Core or or headlines -- headline headline -- -- including energy and food prices alright.
And then potential at the end of the day after troop and then talking about potentially.
What kind of policies might get two.
A targeted unemployment rate -- it certain amount of GDP growth is that that's the kind of well I don't I don't.
I don't think that that the Central Bank in particular has the ability to target an unemployment rate or targeted GDP growth particularly from specific real GDP.
Too many other factors influence -- -- Too many other things go long drive those variables around ways of monetary policy doesn't control.
So it's one thing to have an inflation target because inflation is ultimately a monetary phenomenon we know it's something the Central Bank control over the intermediate.
Term obviously not month to month.
And and by the way the Central Bank is the only institution government to control inflationary.
So it's very important that we recognize in terms of accountability.
As -- responsibility.
And that we can achieve that and we we are committed to achieving happiness in the public understands that we are committed to achieving.
Then inflation expectations remain stable we actually have more flexibility.
To do other things.
Help the economy and stabilize -- we and we don't have to wary.
That somehow the public's gonna get upset because they think inflation's going to be run away because we're monetizing the debt or something like.
And speaking of which lets you run through your forecasts for inflation for economic growth for unemployment going forward we just in the November meeting.
The FOMC released it's SCP it's a summary of economic projections.
And we saw downward and downgrading.
Of the forecast abide by the FOMC as a whole.
Where do you think the economy is going in 2012 point thirteen on unemployment inflation.
Well I think for for this year obviously everybody mark down their forecast for 2011 because since June we've certainly got the revisions of the GDP numbers the first breaks everybody's forecast have to come down because of that if nothing else.
But we saw the third quarter that.
We had a two for two and a half percent rate which was which was about what I expected and we'll probably continue -- the rest of this year which would to be about right.
I'm looking for 2012 and 2013 -- to pick up the pace a little bit I think -- maybe 3% give or take maybe a little bit.
But we're back to the sort of modest growth scenario that everybody's kind of unhappy with because it doesn't bring unemployment down very fast.
But but that's kind of the train that we're on right now I think.
His elevated right now relative to -- -- was a year ago headline inflation certainly elevated even core inflation has risen somewhat.
I think that's them.
That -- us being.
-- -- vigilant over.
I think if we conduct policy -- appropriate ways it's and then we'll keep inflation close to 2% so that's kind of my forecast -- -- -- will act responsibly.
And keep inflation.
So I think the economy's gonna continue to grow slowly unemployment rates are gonna gradually decline.
In the end about what 8% to somewhere and I'm -- -- 8% of my feelings well that it by the end toward by the end of 2012.
And somewhat better than that in the thirteen would this -- this gradual improvement.
In his press conference for chairman Bernanke did talk about jobs and and what it would take.
To launch additional protect -- potentially other stimulus.
Such as quarter and additional quantitative easing QE3.
And persistent high joblessness was one of them.
Is that the same do you agree with that and and I think that's inflation I think they're in my view there are two things it would generate.
-- more aggressive action on the part in -- responses of one kind or another certainly.
If we were to face like we were facing last fall serious deflationary.
Episode where prices were.
Falling in May be going into deflation.
I believe we ought to have a 2% inflation target and we need to defend -- we need to reinforce the fact that we -- act.
To make monetary combination.
Greater in order to ensure that we get the -- inflation we don't have inflation.
The second thing I think that we have to be quite concerned about this is Europe as we talked about earlier.
The risks of financial spillover effects from a crisis in Europe the Fed needs to be prepared to act in that regard as well.
Exactly what we would have to do depend on what happened but.
But we need to prepare to ensure.
That financial stability remains in financial markets continue to function.
Charles Plosser of Philadelphia Federal Reserve Bank thanks for joining fox particularly.
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