Dissent In Federal Reserve Melting Away

Federal Reserve Bank of Philadelphia president Charles Plosser, who has replaced FOMC hawk Thomas Hoenig, started out as one but has closed ranks with the others on the subject of QE2.

Last year, Plosser voiced strong opposition to the Fed’s bond-buying plan. But in his first speech at a voting member, he was more even-handed.

To be sure, Plosser voiced concerns about having to stop or curtail purchases if the economy gathers steam.

But the inflation hawk left open the door for more easing if more serious deflation risks emerge.

“If serious risks of deflation or deflationary expectations emerge, then we would need to take that into account as we adjust our policy stance,” Plosser said.

He's still a skeptic, but has significantly toned down his rhetoric.


Any possible QE3 is still controversial, but QE2 is becoming less and less so as time goes on. There's nothing like a lot of outside criticism of an inside policy to make the insiders support it more and more. Sad, but all-too-true.