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Fed's Plosser says more QE would be too risky

WASHINGTON (MarketWatch) - The Federal Reserve should not embark on another large round of asset purchases to try to lower the unemployment rate, because the benefits seem small and the costs are potentially risky, said Charles Plosser, the president of the Philadelphia Federal Reserve Bank, on Thursday. "I don't see any point in growing [the balance sheet] any further," he remarked in an interview on CNBC at the start of the Fed's annual policy retreat in Jackson Hole, Wyo. Plosser, a leading hawk on the Fed, is not a voting member of the central bank's interest-rate setting committee this year. He also said the Fed is trying to force interest rates lower even though consumers and businesses don't want to borrow money. Plosser added he remains concerned that the $1.5 trillion in excess reserves sitting in the banking system as a result of earlier rounds of Fed asset purchases will ultimately create higher inflation when they begin to flow out as loans.