When the Fed wants to set an untenable position it tends to do so with non-voting members. That is happening again today as Plosser doesn't soften hawkish tone on rates.



In a speech at the University of Rochester, Plosser said the Fed cannot resolve the cause of the tension in financial markets, uncertainty over the value of complex securities tied to subprime and other mortgages and who holds these derivatives.



"It is important to recognize that the Fed cannot resolve this price discovery problem. The markets will have to figure this out," Plosser said in his prepared remarks.

"Arbitrarily lowering interest rates or providing liquidity to the market does not provide the answers the market seeks," Plosser said.

Indeed, rate cuts might only delay the painful process, he said.

Philadelphia Fed President Charles Plosser strongly suggested that he is not in favor of an additional rate cut at the next policy meeting on Dec. 11.

December FOMC Meeting Outcomes





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