Philadelphia Federal Reserve Bank President Charles Plosser Thursday refused to comment on when the Fed may increase the federal funds rate after its monthly asset purchase program ends, saying any changes to rates will depend on conditions in the U.S. economy.
Speaking to reporters following a speech in London, Plosser also said that he thought the bar for changing the pace of tapering was high. Plosser, who is a voter on the Federal Open Market Committee this year, also said although events in Ukraine could continue to rock stock markets but would not likely impact the US real economy.
“I think the hurdle for changing the pace is pretty high. The good thing about it is there seems to be fairly widespread acceptance in the markets that we’re not going to deviate from that unless something pretty significant happens,” he said.
“The committee will decide when to hike rates, it’s going to depend on the economy at the end of the day,” he added.
Turning to discuss ongoing tensions in Ukraine, Plosser said that events could continue to shake stock markets but unless the situation were to dramatically worsen, they would not derail the recovery in the US.
“It’s going to add some volatility but hopefully that will diminish over time. I do think that how it plays out is going to be interesting but I don’t see that it’s terribly fundamental to how the United States economy is going to evolve,” he said.
Plosser also cautioned against drawing conclusion’s from tomorrow’s jobs numbers due to distortions from the extreme weather seen during the month.
“I don’t know what the jobs numbers are going to be. I’m going to take it with a grain of salt. This reflects numbers that were collected early in February and we were still in the midst of terrible winter storms in February,” he said.
“I think it’s going to be a couple more months before the noise gets filtered out,” he added.
Plosser also said that international interests about the Fed’s tapering are not uniform, so the Fed would continue to focus on conditions in the US economy, unless there were spill-over effects from the turmoil in emerging markets.
He also said that the Fed needed to be vigilant to developments in US wages as they are a lagging indicator of what is going on in the economy.
In an earlier speech, Plosser warned that the Fed could find itself “well behind the curve” if it does not quicken the pace at which it is dialing back large-scale asset purchases.
The Fed should not be adding monetary stimulus to an economy which he sees growing at a better pace, in Plosser’s view.