Fed's Plosser: Government can't speed up recovery (by Greg Robb)

WASHINGTON (MarketWatch) - Greater job growth and a more rapid recovery will not occur until the economy undergoes a number of adjustments and this process cannot be accelerated by Federal Reserve monetary policy or other government actions, said Charles Plosser, the president of the Philadelphia Fed Bank, on Thursday. The economy was over-invested in housing and finance when the crisis hit. These sectors are shrinking now and labor and capital must be reallocated to other uses. At the same time, the labor force needs to be "at least partially retooled" to match the skills employers demand, Plosser said in a speech to the Southern Chester County Chamber of Commerce in Avondale, Pa. Plosser repeated his opposition to the Fed's new round of bond-buying or quantitative easing and colloquially known as QE3. Last month, the central bank approved an open-ended plan to purchase $40 billion of agency mortgage-backed securities per month and said it would continue the purchases until it saw a substantial improvement in the labor market. "I opposed the Fed's actions in September because I believe that increasing monetary policy accommodation is neither appropriate nor likely to be very effective in the current environment," Plosser said.