Fed's Plosser Cites Concerns About Rising Inflation, Says Rates are Low Enough to Support Growth

During a speech at Drexel's LeBow College of Business, Philadelphia Fed President Charles Plosser suggested that the fed funds rate may be low enough to support expansion as he said, "on the monetary policy front, the Fed's response to the deterioration of the economic outlook and the turmoil in financial markets has resulted in an accommodative level of real interest rates that should support the market forces that will bring economic growth back toward its long-term trend." Furthermore, Plosser - who voted in favor of "less aggressive" policy action during the Fed's March meeting - cited concerns about building price pressures as he said, "(r)ecently, we have had reason to be worried about rising inflation." Indeed, this has helped support the US dollar's early morning rally, as fed fund futures have shifted to price in a 90 percent chance of a 25bp cut on April 30, and a 10 percent chance that the Fed will not cut rates at all. Moreover, this is exactly what we discussed in Thursday's DailyFX special report, What Could Trigger a Turn in EUR/USD?

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