Wednesday, January 07, 2009

Fed Officials Worry Inflation Rates Could Ease Too Much


Key words: Fed’s efforts to purchase debt--Fed’s efforts to purchase debt.
clipped from blogs.wsj.com

Federal Reserve officials at the annual meeting of the American Economic Association indicated they are growing more worried that inflation rates could get too low.

With gasoline prices tumbling, the year-to-year change in the consumer price index is likely to tip into negative territory in the months ahead. Meantime, increases in core consumer prices, which exclude food and energy, have slowed sharply in recent months.

Fed officials don’t foresee deflation happening, but they’d like to avoid even getting close to it.

“It is especially important in such circumstances for the Fed to emphasize its commitment to returning inflation over time to the higher levels that are most appropriate to the attainment of its longer-term objectives,” Ms. Yellen said.

The Fed’s balance sheet has ballooned from less than $900 billion to more than $2 trillion since September
Fed’s efforts to purchase debt
“have only just begun.”
 blog it

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