Charles Plosser Says Oil Won't Cause Broader Inflation

Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia is speaking today and he is saying that the low inflation rate should be the top priority of the Federal Reserve.

According to prepared remarks obtained from CNBC, Plosser said, "A stronger rebound in the economy or inflation than some now expect could require policy actions to be taken sooner and more aggressively than many observers seem to be anticipating."

Plosser is known as an inflation hawk. Plosser is a voting member of the FOMC this year. He said that he expects growth in 2011 to be about 3.5%, and expects the unemployment rate to be between 7-8% in 2012.

He thinks that inflation will be about 2% over the course of the year, in line with the Federal Reserve's targeted inflation rate. He does not think the price of oil, currently over $107 per barrel, will cause broader inflationary pressures.

"If we look back to the lessons of the 1970s, we see that it is not the price of oil that caused the Great Inflation, but a monetary policy stance that was too accommodative," he said.

"As much as we may wish it to be so, easing monetary policy cannot eliminate the real adjustments that businesses and households must make in the face of rising oil or commodity prices," he said.