Does the Fed now foresee greater inflation and financial market volatility ahead?
*Bloomberg, by Scott Lanman, July 15, 2008:
“Federal Reserve officials raised their projections for economic
growth and inflation this year after government rebate checks aided
consumer spending while oil prices rose to fresh records.
Policy makers estimate U.S. gross domestic product will increase by 1.0
percent to 1.6 percent this year, compared with the 0.3 percent to 1.2
percent growth they predicted in April, according to a Fed report
today. Consumer prices, including food and energy costs, are projected
to rise by 3.8 percent to 4.2 percent, up from the April forecast of
3.1 percent to 3.4 percent.
The Fed reiterated projections for faster growth and a drop-off in
inflation next year. The estimates reflect the June 25 assessment by
Fed policy makers that risks of slower growth had ‘diminished
somewhat,’ while the danger of faster inflation and unmoored price
expectations had increased. Chairman Ben S. Bernanke said in related
testimony today that Fed officials must be ‘particularly alert’ to
signs of broader inflation.
Most Fed officials saw growth risks as ‘weighted to the downside,’
while inflation risks were ‘weighted to the upside,’ the central bank
said in the report. ‘In addition, participants expressed noticeably
more uncertainty about their inflation projections’ than in the
previous two forecasts of January and April, the Fed said.”
*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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