Recession is a Bigger Concern Than Inflation

Despite the risk of inflation, further rate cuts may be appropriate and necessary amid a struggling economy, a Federal Reserve official said Monday.

In a speech delivered to the National Association for Business Economics in Washington, the president of the Philadelphia Federal Reserve, Charles I. Plosser, said inflationary worries can be put aside in certain unique situations...

Plosser, a member of the key interest rate-setting Federal Open Market Committee, argued that the current economic downturn warrants further action to avoid falling into a recession.

"I believe we are in a situation where monetary policy cannot be made by focusing solely on inflation," Plosser said. "The current turmoil in financial markets has already had a significant impact on the economy and has the potential to continue to restrain economic growth going forward."

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The economy is growing, although it is slow growth, yet the Fed is continuing to ignore the very real inflation threat. Bernanke and the Fed will be too little, too late to stop inflation.