Of course, before the Fed can begin to implement any sort of exit from the massive volume of accommodation it has put in place, it must stop its attempts to increase accommodation through its ongoing asset purchase program. I was not in favor of the September and December decisions to further grow the balance sheet, as I believed that the costs exceeded the expected benefits. Nevertheless, the Committee chose to establish the current open-ended asset purchase program that would adapt to changing economic conditions, with particular attention to the labor market.
And:
In particular, we should return to an operating framework in which the federal funds rate is our policy instrument, we should shrink the size of our balance sheet to a level consistent with this framework, and we should shorten the duration and return the composition of our portfolio to all Treasuries.
Based on how the members have voted recently, Plosser is not likely to get his way.
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