Three Fed Presidents Say Disinflation May Prompt Easing
By Steve Matthews & Joshua Zumbrun - Apr 18, 2013 2:57 PM ET
Three regional Federal Reserve bank presidents said a further decline in U.S. inflation below the Fed’s 2 percent goal may signal a need for more accommodation.
“If inflation looked like it was going to sag further on a persistent basis, I would certainly consider stimulus for the purpose of bringing inflation up to target,” Richmond Fed President Jeffrey Lacker said today, adding he doesn’t see an imminent disinflation risk.
Minneapolis Fed President Narayana Kocherlakota today called for guarding the inflation target “from below,” while James Bullard of St. Louis said yesterday, “we should defend the inflation target from the low side.”
Policy makers are expressing concern over disinflation even as some officials, including Lacker, advocate curtailing easing by slowing the Fed’s $85 billion monthly pace of bond buying. Consumer prices rose 1.3 percent in February from a year earlier, matching the lowest level since October 2009, according to the Fed’s preferred gauge of inflation.
“The Fed is missing its dual mandate on both sides -- unemployment is too high, and inflation is too low,” said Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset manager.
“This simply makes it more likely the Fed will stick with the program for a while, and talk of scaling back sales this summer is diminishing, partly because of the inflation data,” said Feinman, a former Fed senior economist in Washington.
more:
http://www.bloomberg.com/news/2013-04-18/three-fed-presidents-say-disinflation-may-prompt-easing.html
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