Fed's Plosser warns on US fiscal policy driving monetary decisions

Reuters

Nov 1 (Reuters) - The Federal Reserve needs to be wary ofallowing U.S. fiscal policy to drive monetary policy decisions,Philadelphia Fed President Charles Plosser said on Friday,adding the short-term effects of the 16-day government shutdownshould be small.

"We could easily find ourselves in what some people describeas a fiscal dominance regime where monetary policy becomestotally driven by fiscal policy. That's not a good place,"Plosser said on CNBC.

"I don't believe the shutdown is terribly consequential froman economic point of view in terms of the economy in the shortrun. It will have some economic effects but they will be smalland it will be temporary."

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