Fed Mostly Ignores Inflation

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

- FOMC Statement, April 29

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

- FOMC Statement, June 24

The economy and policy paragraphs were pretty much identical to April. The FOMC removed deflation as a concern noting commodity prices have risen but still expect inflation to remain subdued.

For now it looks like they are just going to wait and see how things play out and then react. The risk, in my opinion, is that inflation begins to take off and once it does it’s too late to get it back under control. In fact, that is my forecast.

Not much here for markets, and stocks have sold off a bit in the wake.

Comments

[user396040:]

Because there isn't any inflation.

Jun 24 03:56 PM

[LKofScotland:]

how's your property tax bill looking? cheaper?

Jun 24 04:07 PM

[nobby73:]

Deflation is a far greater danger than inflation. I would go as far as to say inflation would actually help resolve the leverage crisis, so expect them to continue to say we see no inflation risk until it cannot be denied any longer and pray it catches the bond market by surprise..

Jun 24 04:14 PM

[j_remington:]

Inflation is everywhere. Who is the government fooling?

Jun 24 04:16 PM

[I need more...:]

property tax down; food down; clothing, any kind of electronics, othr goods WAY down. Everything is on sale, and not 20% off, 40-70% off.
Restaurants flooding the market with coupons, free entrees, anything to stay alive. Malls are empty; airline tickets way down; hotels down.
Down, and going lower.


On Jun 24 04:07 PM LKofScotland wrote:

> how's your property tax bill looking? cheaper?

Jun 24 04:19 PM

[Tomcat101:]

Gas- up, up, up.


On Jun 24 04:19 PM I need more cowbell wrote:

> property tax down; food down; clothing, any kind of electronics,
> othr goods WAY down. Everything is on sale, and not 20% off, 40-70%
> off.
> Restaurants flooding the market with coupons, free entrees, anything
> to stay alive. Malls are empty; airline tickets way down; hotels
> down.
> Down, and going lower.

Jun 24 04:31 PM

[pdub271:]

Gas prices, exactly. And how about the dollar's crappy exchange rate? It's not inflation per se, but it helps to devalue the dollar.

I bet China and others will continue to pull out of bonds, and that will hasten the deep doo-doo inflation.

Jun 24 06:11 PM

[Mark54:]

Heard a decent economist speak this weekend. He recently attended a economic council forum attended by a few federal reserve presidents. These presidents were perplexed by the fact that the general market was concerned with inflation rather than deflation.

Jun 24 11:09 PM

[Moon Kil Woong:]

Just because consumer goods and services are down now doesn't mean inflation is low or tame. Clearly commodities are up. By the time they work their way through the system and hit the market inflation will be a raging fire.

Inflation can happen on slack demand. When people don't want to sell and question the value of the currency exchanged inflation can happen even in a depression. Just ask anyone who has had a bout of stagflation or hyper inflation. During the 70's there wasn't raging damand. The economy was in the dump demand was falling yet inflation was burning up everyone's value.

Anyone who says there can't be inflation because no one is buying anything doesn't know anything about our fiat money system.

Jun 24 11:18 PM

[Danny Furman:]

I don't know what country people claiming deflation are from. Retail prices are down, but retail shopping is consumer rape to begin with. Grocery stores, gas stations and any other less than highly elastic goods are way up in price. More people are shopping at discount stores because it allows them to continue gluttony. The American consumer is sacrificing quality for quantity...It's nothing new, just reaching new extremes. The dollar and retail are still huge bubbles, as is real estate...

Jun 25 12:30 AM

[Adrena:]

Inflation is here, and will only increase dramatically in the coming months and years. It cannot be otherwise based on the amount of money the government has been printing, their need to "reduce" the mind blowing amount of debt accumulated, and the commodities hunger accelerating in Asian countries.

Jun 25 08:46 AM

[TCK:]

The government wants inflation in order to pay off all the debt being taken on.

New money coming into the system is essential in any Ponzi scheme.

Jun 25 08:47 AM

[user396040:]

The rate is flat. The tax is down because the assessment is down.


On Jun 24 04:07 PM LKofScotland wrote:

> how's your property tax bill looking? cheaper?

Jun 25 11:17 AM