Tags: Fed | Growth | Slowdown

Report: Some Fed Officials Fear Risk of Deflation

By    |   Wednesday, 14 Jul 2010 12:47 PM

Federal Reserve policy makers reportedly are divided about just what the U.S. central bank should do to revive a stalling economic recovery.

Fed officials still expect the U.S. economy to keep growing but they are expected to trim their second-half forecasts, as have many private forecasters.

One topic under debate is the possibility that today's already-low inflation may turn into a debilitating bout of deflation, a broad drop in prices across the economy, The Wall Street Journal reported.

Fed officials disagree on the risk of deflation. A few see it as a threat; others call it very unlikely, Fed officials told the Journal.

Fed officials appear to be in a wait-and-see mode. But having cut interest rates to near zero, most of the Fed's options for spurring growth aren't very appealing.

Some policymakers, including Fed governor Kevin Warsh and Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Va., are reluctant to revive Fed purchases of U.S. government bonds or mortgage-backed securities, the most forceful action the bank could take if it decides the economy needs more help, the Journal reported.

Meanwhile, Kansas City Federal Reserve Bank President Thomas Hoenig said that the U.S. economic recovery is on track despite some setbacks and the central bank should take no additional actions to encourage economic growth.

"I have not seen any recoveries that are perfectly straight lined," Hoenig told Reuters on Tuesday. "When you look at the long-run trend lines, I think the most likely outcome is for continued growth, and that's what we should act on."

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
StreetTalk
Federal Reserve policy makers reportedly are divided about just what the U.S. central bank should do to revive a stalling economic recovery. Fed officials still expect the U.S. economy to keep growing but they are expected to trim their second-half forecasts, as have many...
Fed,Growth,Slowdown
257
2010-47-14
Wednesday, 14 Jul 2010 12:47 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved