A 60 Second Breakdown Of How Charles Plosser Wants The Fed To Tighten Policy

Charles Plosser

Hawkish Philadelphia Federal Reserve President Charles Plosser has outlined his strategy for ending quantitative easing and the Fed’s zero interest rate policy.

The full speech is here, but we have a brief breakdown of what Plosser’s strategy for returning the Fed to normalcy.

12 month program:

  • Hike rates 25 bps at every Fed meeting (eight per year)
  • Sell $125 billion in assets after each meeting
  • Result: In 12 months, the Fed Funds Rate rises to 2.5%
  • Result: In 12 months, the Fed reduces its balance sheet by $1.45 trillion

18 month program:

  • Sell $67 billion in assets after each meeting
  • Raise rates to 3.5%


  • Fed Funds rate functions as policy tool normally
  • Fed balance sheet down to $50 billion in assets

Don’t miss: Why Ben Bernanke doesn’t think a fuel price shock merits a rate hike >

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