Fed's Plosser: Rate hikes will likely need to begin soon (by Greg Robb)

WASHINGTON (MarketWatch) -- Monetary policy is currently very accommodative and needs to be reversed and the rate hikes will likely need to begin soon, said Charles Plosser, the president of the Philadelphia Federal Reserve Bank on Tuesday. "To keep inflation expectations anchored means that monetary policymakers will have to back up their words with action," Plosser said. The economy should return to a 2.75% annual growth rate in 2009, Plosser said. Many economists say inflation is not a risk because workers cannot demand higher wages in the new global market. But Plosser disputed this, saying that wage gains will come after inflation is out of control.