The outspoken president of the Federal Reserve Bank of Philadelphia will step down in March, shortly before the central bank is expected to raise interest rates for the first time since the recession, the regional bank said Monday.
Charles Plosser, 66, has been one of the most vocal internal critics of the Fed's efforts to revive the economy after the worst economic downturn since the Great Depression. Most recently, he has argued that the Fed should soon start hiking its target for short-term interest rates -- which have been at zero since 2008 -- to ensure the central bank has time to move gradually. Otherwise, he said, the Fed could find itself behind the curve and forced to raise rates quickly to keep up with an overheating economy.
"If that were the case, that in itself could be disruptive to the economy and it could create more problems than it solves," Plosser said in an in interview last month. "That’s the problem with this stop-go policy. Do I know that’s going to happen? Of course not, but I think that’s a risk we’re taking, and I see less risk of starting earlier and ensuring that I can go slow.”
Plosser is currently a voting member of the Fed's policy-setting committee and dissented during its meeting in Washington last week. He has opposed the central bank's official position six times since taking over the helm of the Philadelphia Fed in 2006.
A spokeswoman for the regional bank said Plosser has no immediate plans following his retirement in March but will "actively consider" his next steps. He has spent most of his career in academia and was previously dean of the business school at the University of Rochester.
In a statement, Fed Chair Janet Yellen called Plosser an "insightful and dedicated leader and colleague."
"I am particularly grateful for his vital contributions to the work of the subcommittee on communications," she said. "My colleagues and I will miss his keen insights, deep analysis, and good humor."
Plosser's departure will coincide with the mandatory retirement of another one of the central bank's internal critics, Dallas Fed President Richard Fisher. Regional bank presidents must step down by age 65, unless they were initially appointed after age 55. A spokesman for the Dallas Fed said that Fisher has not announced the date he will step down.
The Fed's policy-setting committee will be dominated next year by officials who favor a more patient approach to raising interest rates. Many investors expect that moment will occur about the middle of next year.