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Inflation
November 9, 2006

Will The Fed lose credibility to fight inflation now that Democrats have control of Congress?

Inflation

"Federal Reserve Chairman Ben S. Bernanke may find it harder to establish an inflation target now that Democrats have control of Congress.

Rhode Island Senator Jack Reed, Massachusetts Representative Barney Frank and other Democrats prefer that the Fed focus on promoting growth as well as containing inflation. Some legislators advocate that the Fed adopt a target for employment as well as prices -- anathema to Bernanke and others at the central bank.

"The Democrats will give Bernanke a tougher time than the Republicans on inflation targets,'' said Tom Gallagher, a senior managing director at International Strategy & Investment Group in Washington.  "Support is going to be harder to come by.''

Bernanke has argued that a target would help cement the Fed's credibility as an inflation-fighter and make it easier to manage the economy. If he's unable to press ahead, supporters say, those aims might be damaged."

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. 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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