Growth may demand rate hike, Fed’s Plosser says

PHILADELPHIA – Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank may need to raise its benchmark interest rate, Bloomberg News reports.
“With growth prospects of the economy improving, there is some risk that we may not see a return to price stability unless monetary conditions are further tightened,” Plosser said in a speech yesterday to the Greater Philadelphia Chamber of Commerce.
The Federal Open Market Committee last week left rates unchanged at 5.25 percent, for the fifth meeting in a row, and said inflation appears to be slowing “modestly.”
As a Fed newcomer – he’s been the reader of the Philadelphia Fed since August – Plosser isn’t yet eligible to vote on policy. But he told the Chamber he’s “not convinced that underlying inflation is on a downward trend,” because a recent decline in oil prices might be only temporary.