Fed's Plosser: Monetary policy cannot do more (by Greg Robb)

WASHINGTON (MarketWatch) - Monetary policy cannot do more to bring down high unemployment, and trying to do so would send the Federal Reserve "down a very treacherous path," said Charles Plosser, the president of the Philadelphia Federal Reserve Bank, on Tuesday. The problem is not just inflation risk down the road, Plosser said in a speech at the University of Delaware. "Prolonged efforts to hold interest rates near zero can lead to financial market distortions and the misallocation of resources," he said. Plosser was relatively upbeat about the outlook, calling for growth around 3% a year over the next two years. He said the January unemployment report showed "a clear positive trend" that shouldn't be downplayed.