Fed's Plosser: Inflation needs careful watching (by Greg Robb)

WASHINGTON (MarketWatch) -- Inflation may moderate in the near term but that doesn't mean the Federal Reserve can relax, said Charles Plosser, the president of the Philadelphia Federal Reserve Bank on Wednesday. With commodity prices now leveling off or declining and investors not expecting higher prices, "inflation will moderate in the near term," Plosser said. "As a policy maker though, I focus less on the near term and more on the medium term," he said. With the Fed's very easy monetary policy now in place for more than three years, "we must continue to monitor inflation measures very carefully," Plosser said in a speech to the Main Line Chamber of Commerce in suburban Philadelphia. Plosser said he did not support the Fed's statement after its January meeting that pushed out its guidance of when the first rate hike might occur by 18 months until late 2014. Plosser said the economy had improved since late last year and more easing only risked "undermining confidence." Earlier this week, Plosser said, in a television interview, that the Fed might have to hike rates before the end of the year.