Are we in store for an inflationary recession?
*The Wall Street Journal, by Sudeed Reddy, February 8, 2008:
Mounting Inflation Concerns Weigh on the Fed's Next Move
"Federal Reserve officials are acknowledging increasing weakness in the
economy, signaling a willingness to cut rates again at their next
meeting. But inflation concerns are rising among some officials,
indicating the magnitude of their next move may be a matter of
contention.
In speeches this week, policy makers said they are expecting a sharp
economic slowdown during the first half as the housing slump, credit
crunch and market turmoil take a toll on consumers and businesses."
"Charles Plosser, president of the Federal Reserve Bank of Philadelphia
who also is on the voting rotation this year, suggested this week that
he would need to see a deeper deterioration in the economy -- beyond
the weak numbers already expected -- to support further easing.
But Mr. Plosser, who backed the last two rate cuts, said he expects
'little progress' in lowering a key inflation measure this year or
next, 'and I am skeptical that slower economic growth will help,' he
said. 'All you have to do is recall the 1970s when we experienced both
high unemployment and high inflation to appreciate that slow economic
growth and lower inflation do not necessarily go hand in hand.'"
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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