February 5, 2014 / 6:41 PM / 4 years ago

When time to tighten, Fed's Plosser worries about falling behind

Feb 5 (Reuters) - Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said on Wednesday he worries the U.S. central bank’s accommodative policies will lead it to have to “chase” the market when in the future it attempts to tighten policy.

“We at the Fed should be worried about the law of unintended consequences and whether or not we can execute the plan that we think will get us there - whether markets will get out ahead of us rapidly, how fast we might have to chase rates up for example, or whether we might have to push them up in a way that causes other disruptions in financial markets,” Plosser told an economics conference in Rochester, New York.

“I think it’s safe to say we don’t have very good answers to those sorts of questions,” he said, adding: “The risk of unintended consequences can be significant.”

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