Inflation Target
Plosser joined Bernanke in calling on the Fed to create an inflation target, which the FOMC adopted in January by setting a 2 percent objective for price increases.
"Plosser has been effective in pushing his agenda toward at least getting more rules," said Robert Brusca, chief economist at Fact & Opinion Economics in New York.
Fed Vice Chairman Yellen, in an April 11 speech, said that while rules are "helpful in evaluating the stance of policy," it would be "imprudent to adhere mechanistically to the prescription of any single policy rule."
She said that applying the Taylor rule today would mean the Fed should raise its benchmark interest rate, now close to zero, in 2013. That's in contrast to the Fed's view that rates should stay low at least through late 2014.
Yellen said she favors a variant of the Taylor rule focusing on growth and indicating rates should remain near zero until early 2015. She said the variant "is more consistent with following a balanced approach to promoting our dual mandate" for price stability and maximum employment.
Calculations Disputed
Taylor disputed Yellen's calculations in a commentary on his website, saying the rule currently implies a federal funds rate of 1 percent or higher. He also disassociated himself from Yellen's variation of his model, saying her approach focuses too much on economic slack and could be used to support more asset purchases by the central bank.
Regardless of their differences over a policy rule, Fed officials probably won't shift much today from their prior statement on March 13, economists said. Yields on benchmark 10- year Treasury notes were at 1.97 percent yesterday, close to an eight-week low, amid speculation the FOMC will keep borrowing rates at record lows.
Policy makers will probably revise down their forecasts for unemployment following a drop in the jobless rate, and growth may show "a small tick up," Feroli said.