Philadelphia Federal Reserve (Fed) President Charles Plosser spoke with FOX Business Network’s (FBN) Peter Barnes about the government shutdown and its impact on the economy. When asked whether there’s anything the Federal Reserve can do with monetary policy to help keep economic growth going through the government shutdown, Plosser said, “Trying to react on very short notice to very short events is not a wise way to guide monetary policy.” Plosser also discussed quantitative easing and tapering the Fed’s bond-buying program, saying, “I think there’s opportunities both at October and December to begin the process,” and that, “I think $10-15 billion is a reasonable place to start.  And then I think that there’s no reason we can’t sit and wait and sort of see how the economy performs and how things evolve.”

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Excerpts from the report are below.

On whether there’s anything the Fed can do with monetary policy to help keep economic growth going through the government shutdown:

“Well I mean the Fed has provided extraordinary historically high levels of accommodations to the economy for some time now.  And if the shutdown has relatively small, temporary effects, there’s probably not much we can do about that, or should we react to that particularly I don’t think, because it will be transitory.  Remember, monetary policy has long and variable lags.  And so you know, trying to react on very short notice to very short events is not a wise way to guide monetary policy. I think the issue for the debt ceiling is a much more troubling one and difficult one to imagine the consequences of what might happen.  And there, it would be more challenging, I think.”

On when tapering might begin:

“I think the Fed will continue to evaluate the data and evaluate the situation and make a decision at whatever time they seem to think it’s going to be appropriate. I think that September was a good time.  I think we had prepared the markets.  There’s a meeting in October. There’s a meeting in December.  I think both of those are viable times for us to reconsider.  I don’t think the outlook for the economy now, again, barring particularly a default scenario, I don’t think there’s anything particularly in the economy that’s changed so much that changes the outlook going forward over the next year or 18 months, which would suggest we should alter the decisions we’ve had. So I think there’s opportunities both at October and December to begin the process.  And we should debate that.”

On whether he thinks $10 billion is a good place to start with tapering:

”I think $10-15 billion is a reasonable place to start.  And then I think that there’s no reason we can’t sit and wait and sort of see how the economy performs and how things evolve.”

On whether he plans to vote this way in January:

“Well barring some kind of events that would change my mind, I have argued for some time that I don’t think that our asset purchase programs are very stimulative in the sense of promoting faster economic growth or improved employment conditions.  That’s just been rocking along at a modest pace for a long time now. I think that’s going to continue. So I think it’s appropriate that we unwind from those things and we quit expanding our balance sheet, wind this thing down in a gradual, but predictable manner as soon as possible.”

On whether he’s concerned about the government shutdown’s potential impact on the economy:

“There’s a looming uncertainty on the part of our businesses and citizens.  And so I think we need to get this problem solved and move on.”

On the debt ceiling:

“I think there again, it would not be a good thing for us to default on our debt.  It would not be good for our reputation.  It would not be good for the economy.  And I think that, once again, it’s one of these things where we’ve got a huge, important fiscal problem facing us and we need to get on with dealing with it and deal with it in a real way.  And that’s going to be a challenge.”

On whether there is a way to quantify the impact of the government shutdown and not raising the debt ceiling:

“Well, I think on the shutdown, I think it’s a little easier, although there, too, depending on how long the shutdown lasts for.  Many people are expecting only a couple of tenths of a percentage point on growth in the fourth quarter, assuming it doesn’t, you know, continue for a long period of time.  But even that’s very hard to measure. I think we’re very uncertain even about that.  It may be even smaller, maybe a little bit larger.  But it’s very uncertain.  But if it’s transitory, it’s going to be temporary.  It’s not going to last very long. The debt ceiling is much harder to quantify.”

On whether he thinks that Congress and the president will resolve the debt ceiling at the end of the day:

“Well, I certainly hope so.  I hope they come to an agreement to move forward on that and to not default on the debt.  That would be a bad thing.”