US: the triple threats
Posted by LeGianT on June 21, 2008
by Peter Coy
June 11, 2008, 3:48PM EST
“The Fed’s Plan: More Talk
With little room for the Fed to make a course adjustment safely, Bernanke’s balancing-act comments carry even greater weight than usual
Bernanke expressed mild optimism about the economic outlook, and he promised that the Fed will “strongly resist” an upward creep in inflation expectations.
Inflation is a case in point. In recent years, when the Fed insists that it will keep inflation low, the public believes it, and therefore, as if by magic, inflation really does remain low: Trusting workers don’t ask for higher pay and companies don’t jack up prices. Even though oil prices have more than doubled over the past year and gasoline is $4 a gallon, the consumer price index rose a relatively modest 3.9% from April, 2007, through April, 2008. And recent history shows that when inflation is under control, growth tends to be steadier, too—the best of both worlds.