The above video from Fed governor Plosser was shot before the last Fed meeting, but the governor still explained in fairly good detail why he didn't think additional action by the Fed was warranted. I took some rough notes of his primary points
-- Interest rates are already extremely low -- how much lower can they realistically go? In consideration of that point, here is a chart of the 10-year CMT:
Interest rates are near 50 year lows. The governor also used the phrase "at the margins" several times to suggest that the Fed action could help in a small way, but realistically couldn't do much more. And, in effect, what is the real difference between a 2% 10 year and a 1.9% 10 year.
-- He expressed the opinion that government couldn't help in a big way with the unemployment situation, but could help with some of the structural issues such as retraining etc.. That is, government couldn't help to meaningfully lower the unemployment rate, but it could provide services to help the process along.
-- Core inflation was heating up. Here is a chart of the last 10 years in YOY format:
Part of the move higher is in reaction to the move lower -- that is, prices took a fairly big and pronounced dive so now they are responding. But that's not all of the answer; there is also a clear trend in prices. In furtherance of that idea, here is a 10 year YOY of total CPI:
Note that total CPI is now nearing 10 year highs.
Interestingly enough, one of the interviewers also mentions food prices as a primary problem, which I've mentioned several times before.
While I don't agree with Plosser's overall assessment, I do think his position is well-thought out and deserves scrutiny.
