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Continuing our discussion now with Charles Plosser the president of the Federal Reserve Bank of Philadelphia on his speech today here in Washington DC and his proposals for additional transparency.
Clarity on fed decision making Charlie thanks for sticking around it's -- to be -- more.
Of this as.
And so the the proposals today.
We were to provide more transparency more clarity.
More of variables economic variables.
That might go into.
Flush that battle but what what kind of economic indicators and variables would get plugged into that.
And and how how far are you along in this process.
Your publicly announcing for the first time today but that communication strategies -- ongoing discussion and debate at well.
I mean these are my views are not views of the Canadian I've I've I've been pushing for this sort of effort to be board.
Systematic and how we discuss policy decisions.
And the the variables pretty straightforward you can imagine the how well GDP in the -- You can imagine variables that have to do.
Resource utilization like unemployment rates.
Or capacity utilization in our industrial production managers.
You talk about inflation mean all those things are important for the -- to pay attention to and to react.
And the more we can describe how we react how and -- we will react to movements in these variables or can explain our actions.
In a way that comes from movements in those variables than people get a better understand what we're looking at how we're thinking about policy.
And that helps provide consumers.
And businesses with -- more and the markets and the markets with more certainty and clarity -- -- I'm not certain because we don't know how the future's going to play out.
But it does tell tell.
The public about what we reacting to.
People we have different forecast but what's gonna happen in the future but.
But it tells tells what we would do.
Let's go back into a -- bit more about the economy itself and the current state of the economy.
-- we saw some analysts.
Say after the -- jobs report well this increases the probability.
The Fed might look at additional.
Easing additional QE.
Three -- what have you does it increase the probability.
-- it's just one data point so I had one data point doesn't change probabilities.
Very much of what I think because -- monetary policy ought to be focused on the intermediate to longer term -- short term.
And the only way one data point would change things -- -- it really change your outlook for the next year.
Yourself and one data point doesn't change much outlook for -- and so it doesn't really moving very far.
From where you were -- if you had several data points several months running or so forth where things looked gradually worse and worse than -- gradually.
Your outlook for the future which takes takes more than one.
We've got the Beige Book yesterday would you use it you're meeting coming up here couple weeks lately and April.
The Beige Book did not -- -- Reid it appeared to confirm.
-- it's anecdotal obviously from twelve districts but it didn't appear to raise any red flags about -- I think the good.
The Beige Book was more or less more of the same gradual improvement.
Modest gradual increases in confidence and expectations.
About the future.
Improvements in sales manufacturing is doing a very good job in the country right now it's one of the strong points it has been for throughout the last six months.
So I think it continues to look very encouraging.
I don't think as I said 3% growth is not earth shattering.
But it is continual improvement -- that's that's what I would think that's what I think we'll see.
We've heard some of your colleagues speaking this week on the economy and on on the potential response and can you take.
Additional -- totally off the table.
QE3 off that regularly and additional you'd you'd never say never.
I mean but things for me things would have to deteriorate.
Quite quite substantially.
I would think it would be appropriate for us to try to do something else extraordinary.
And also has sent back to QE2.
-- It was a real concerns -- you among your colleagues that we might be and force of deflation.
Right now that you don't see that.
I don't see effective if anything inflation's been drifting -- for the last year when we get QE2 back in August a -- November of 2010.
Inflation rate was 1% or maybe -- little less unemployment was well above 9% maybe even closer to ten.
At that time and now we're in a world where the unemployment rates come down to.
Eight point two.
Inflation's now -- to this though it doesn't look the same and the prospects for growth look better than they did this so the justification in -- For doing even more.
-- and inflation -- risen on implements fallen.
You have to pick a pretty strong -- of bad numbers to get media.
-- question though you have talked about they need to exit at some point they need to start raising interest it will happen in it will happen.
So what is your current current view on when how and when we could see the -- start to.
Back -- back out well I don't -- this extraordinary.
I think it's gonna depend depend on the economy it's gonna depend on how well things -- my forecasts for this -- 3% growth in the unemployment rate dripping down to something like seven point eight by the -- by the end of 2012.
If that's coming to pass that turned out to be an accurate forecasts and I can see by late 2012 are to -- in 2013.
We may have to face a situation where -- have to start to.
Began gradually raising rates.
And -- two to achieve our objectives that.
The room point fourteen as -- -- -- -- I I my guess is that it.
We've helped to raise rates before it.
Charlie -- that are Philadelphia Federal Reserve thanks so much particular -- and -- it's.
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