Fed's Charles Plosser Says Rates Will Go Up

Charles Plosser of the Philly Fed said that housing problems shouldn't stand in the way of raising rates sooner rather than later.

Bloomberg reported today that Charles Plosser of the Philly Fed said that housing problems shouldn't stand in the way of raising rates sooner rather than later.

Policy makers must increase borrowing costs before inflation expectations become "unhinged."

In addition:

Asked if the Fed can act even as home prices are still falling, Plosser said: "I wouldn't rule that out.''

On whether the rise in home-mortgage rates this year would stand in the way of increases by the Fed in the benchmark interest rate, Plosser said, ``I don't think so.''

If oil prices continue to come down, as I expect they will, it will remain to be seen if the same inflation pressure will continue to exist.  My guess is that if oil goes below $100, as I expect it to do, the Fed will have a bit more latitude to wait.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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