Tags: us | economy | JPMorgan | fears | Higher | Inflation | Spreading

Economists Warn That Fears of Higher Inflation Spreading

Wednesday, 23 Mar 2011 12:09 PM

Economists are warning that rising inflation is a growing threat to the economy and poses new challenges to Federal Reserve policymakers. A survey conducted by JPMorgan found that concerns are growing that core inflation rates, or inflation stripped of volatile food and energy prices, are on the rise despite the Fed's claims to the contrary.

The JPMorgan poll of financial professionals finds that in the U.S., core inflation will be running 1.8 percent a year from now, up from 1.4 percent from a previous survey conducted in November and up from February’s 1.1 percent forecast, according to The Wall Street Journal. Respondents pegged overall inflation at 2.9 percent.

"The report notes the recent jump in oil prices and the longer-running increase in commodity prices may be skewing responses. But the report notes core inflation rates have already been rising in the U.S. and the U.K.," the newspaper reports.

"Sixty-one percent of those surveyed think inflation will be running above the Fed’s target, generally thought to be around 2 percent. Of those respondents, 12 percent thought inflation would be 'significantly' above target."

bernanke200-(1).jpg
Fed Chairman Ben Bernanke
The survey polled 750 respondents, with about 40 percent from North America.

The latest official inflation data in the United States shows core inflation running at 0.2 percent in February while headline inflation was up 0.5 percent.

Meanwhile, economists Vincent Reinhart and Allan Meltzer warn that the pickup in inflation is a growing threat to the U.S. economy and poses new challenges to Fed policymakers.

“For the first time in a while, the Fed can see risks on both sides” — inflation and economic growth, Reinhardt, a former adviser to Fed Chairmen Ben Bernanke and to his predecessor Alan Greenspan, told Bloomberg Television.

Reinhart said the Fed should reduce its purchases of U.S. Treasury securities as it gauges the extent of price increases.

“If you see risk on both sides, then maybe you should go a little slower,” he told Bloomberg. “I think they should cut the monthly purchases to $25 billion,” about a third of the current $75 billion pace.

Meltzer, who has written a two-volume history of the central bank, said “inflation is coming.”

Although price increases are currently “buried,” Meltzer said inflation “will come out as soon as housing prices stop falling.”

Meltzer is a professor of political economy at Carnegie Mellon University in Pittsburgh, and Reinhart is a resident scholar at the American Enterprise Institute in Washington.

Rising food and oil prices are threatening to push up broader consumer price indices across the globe, although Fed officials say that's not the case in the United States and, therefore, monetary policy should remain loose.

"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke has said, according to the Associated Press.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Economists are warning that rising inflation is a growing threat to the economy and poses new challenges to Federal Reserve policymakers. A survey conducted by JPMorgan found that concerns are growing that core inflation rates, or inflation stripped of volatile food and...
us,economy,JPMorgan,fears,Higher,Inflation,Spreading
477
2011-09-23
Wednesday, 23 Mar 2011 12:09 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