Tuesday, March 4, 2008

Inflation Key Worry, Not Recession

Dallas Federal Reserve President Richard Fisher said Tuesday he believes inflation is a greater threat than a slowdown of the U.S. economy, suggesting that he will keep pushing his Fed colleagues to stop cutting rates.

The Fed made a 0.75 percentage point rate cut at an emergency meeting Jan. 21, and another half-point cut at the conclusion of the Jan. 29-30 two-day meeting. Fisher, who joined the Federal Open Market Committee for the two-day meeting, was the sole vote against that cut.

The FOMC is next set to meet March 18, and investors are widely expecting another half-point cut at that meeting...

"Talk of 'cheap money' makes my skin crawl," he said in his prepared remarks. "The words imply a debased currency and inflation and the harsh medicine that inevitably must be administered to purge it."...

"We cannot, in my opinion, confidently assume that slower U.S. economic growth will quell U.S. inflation and, more important, keep inflationary expectations anchored," he said. "Containing inflation is the purpose of the ship I crew for, and if a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient."

read the article

Finally, someone is recognizing the real threat.

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