Fed's Plosser on the limits of monetary policy

Monetary policy is not the solution to all economic ills, said Charles Plosser, the president of the Philadelphia Federal Reserve.

"I think it is particularly important to recognise that monetary policy cannot solve all the problems the economy and financial system now face," Plosser said. "It cannot solve the bad debt problems in the mortgage market. It cannot re-price the risks of securities backed by subprime loans. It cannot solve the problems faced by those financial firms at risk of being

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