Will Bernanke and the Fed have the power and strategy to control U.S. inflation?
*Bloomberg, by Craig Torres & Scott Lanman, July 13, 2009:
“Federal Reserve Chairman Ben S. Bernanke probably will show how the
central bank will exit the biggest monetary expansion in history when
he reports to Congress next week, economists said.
The Fed pumped $1 trillion into the banking system over the past year
through bond purchases and emergency loans, doubling assets on its
balance sheet. Reassuring investors that inflation won’t exceed
forecasts once the recession ends will give the Fed more credibility,
said Dean Maki, chief U.S. economist at Barclays Capital Inc. While
policy makers have spoken about specific tools they may use, they
haven’t laid out a strategy.
‘Now is the time to articulate the exit strategy,’ said Vincent
Reinhart, former monetary-affairs director at the Fed and now resident
scholar at the American Enterprise Institute in Washington. ‘The
Federal Reserve doesn’t speak with one voice and the testimony is an
opportunity to present the consensus view.’
The Federal Open Market Committee will release updated economic
forecasts on July 15. At their April meeting, officials anticipated
inflation of between 1 percent and 1.6 percent in 2010, up from 0.6
percent to 0.9 percent this year. Their long- run forecast is for price
increases of 1.7 percent to 2 percent.
Investor expectations for inflation have increased this year, as
measured by the gap between yields on 10-year U.S. government notes and
10-year Treasury Inflation-Protected Securities. The spread widened to
1.52 percentage point at the end of last week from 0.09 percentage
point in January.”
*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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