Another Fed President Dings Bernanke

Philadelphia Federal Reserve Bank President Charles Plosser said today that the US economy is recovering and that he expects GDP growth to continue through this year and next, albeit at a modest pace of around 3%. At the same time, Plosser suggests that inflation will be around 2% in 2012, the informal target established by the Fed, but he says he remains “concerned that monetary policy has exposed us to substantial inflation risk over the medium to longer term.”

Plosser does not believe that further monetary accommodation is required, and he certainly disagrees with Fed Chairman Ben Bernanke’s attempts to do something about unemployment and housing. He dissented from Fed decisions in August and September last year to maintain the Fed’s so-called “Operation Twist” and he does not want to continue reinvesting Fed funds in more mortgage-backed securities “in an effort to help the housing markets.”

The full text of Plosser’s speech is available here.