Federal Reserve on Inflation

This article is an interesting back and forth between statements made by Federal Reserve Chairman Ben Bernanke and House Budget Committee member Paul Ryan's response to his comments.


Bernanke is really just reaffirming the Feds commitment to continue keeping inflation low in the future and making sure it remains a key point when making future policy decisions.

Inflation appears to “be very well-controlled now,” Bernanke said, and should remain below the Fed’s 2 percent target “for the next couple of years.” This view is backed up, he said, by “more stable commodity prices and substantial slack in labor and product markets.”

 Ryan disagrees though, saying he:

“was greatly concerned to hear the Fed recently announce that it would be willing to accept higher-than-desired inflation in order to focus on the other side of its dual mandate, which is promoting employment.”

That would be a mistake, Ryan said, because “the Fed’s tools for promoting employment are limited, imprecise, and can have highly undesirable consequences.  [It] runs the great risk of fueling asset bubbles, destabilizing prices, and eventually eroding the value of the dollar,” Ryan said. “The prospect of all three is adding to uncertainty and holding our economy back.”

Check out the rest of the article on Portfolio.com 

A huge non-fan of inflation,
~Steve