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Plosser Sees Inflation as Risk When Fed Unwinds Balance Sheet

Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said inflation will be a concern as the Fed unwinds its balance sheet following unprecedented asset purchases.

“We have created over $2 trillion of excess reserves that are sitting on the balance sheets of the banks, it’s just sitting there, it’s not inflationary,” Plosser said today on CNBC television. “It will be inflationary when that starts to flow out of the banking system, that’s when we’ll have to start worrying about inflation.”