Fed's Plosser Warns Of Inflation Risks From Asset Buying

(RTTNews) - The Federal Reserve's $600 billion quantitative easing program may not do much to bring down the unemployment rate and could turn out to be highly inflationary, a top Fed official said on Tuesday.

Federal Reserve Bank of Philadelphia President Charles Plosser questioned the wisdom of unconventional monetary policy when financial markets were no longer disrupted.
He said it was a mistake to consider QE2 as a subsitute for fiscal easing and that it would make the eventual exit from the current expansionary policy more complicated.
"As economic conditions improve and those excess reserves begin to flow out into the economy, inflationary pressures will grow," Plosser said. " And given the magnitude of those reserves, these pressures could be significant."