{"id":517817,"date":"2010-04-06T11:38:24","date_gmt":"2010-04-06T15:38:24","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/04\/06\/dallas-feds-fisher-inflation-low-on-list-of-worries\/"},"modified":"2010-04-06T11:38:24","modified_gmt":"2010-04-06T15:38:24","slug":"dallas-fed%e2%80%99s-fisher-inflation-low-on-list-of-worries","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/517817","title":{"rendered":"Dallas Fed\u2019s Fisher: Inflation Low on List of Worries"},"content":{"rendered":"

Richard Fisher<\/strong>, president of the Federal Reserve Bank of Dallas<\/strong>, built a reputation as an outspoken inflation fighter in the summer of 2008, when he lobbied the Fed to push interest rates higher to combat rising consumer prices even though the financial crisis was still raging.<\/p>\n

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Bloomberg News<\/dd>\n
Dallas Fed President Richard Fisher<\/dd>\n<\/dl>\n<\/div>\n

Today, inflation is low on his list of worries. In fact, he says there is small risk that deflation, or falling consumer prices, could become a bigger problem for the Fed in the months ahead than higher inflation. That puts him on the side of those who want to keep interest rates near zero for at least several more months — if not much longer — to help the recovery get on stronger footing.<\/p>\n

In a wide-ranging interview, Mr. Fisher said the global economy is burdened by such large amounts of unused industrial capacity and idle labor that consumer prices face little risk of shooting higher. \u0093Because of the enormous slack in the system, and as you know I tend to be very vigilant about inflation, we\u0092re just not seeing price pressures right now,\u0094 Mr. Fisher said. \u0093If anything, the tail risks are on the deflationary side.\u0094 (\u0093Tail risk\u0094 is market-speak for nightmare scenarios, low probability events that can be very damaging to markets and the economy.)<\/p>\n

Fed officials have been engaged in recent weeks in a deepening debate about whether inflation is slowing even as the economy recovers. Many measures of inflation are slowing, but some Fed officials dismiss these measures because they might be getting skewed by a sharp slowdown in housing costs. It is an important debate: If Fed officials come to the view that inflation is slowing a lot; it could push interest-rate increases further down the road, possibly into 2011.<\/p>\n

Though he says he\u0092s still worried about longer-term inflation risks tied to immense U.S. budget deficits, Mr. Fisher\u0092s current view on inflation puts him close to others, like San Francisco Fed President Janet Yellen<\/strong>, who say inflation is not a risk and is still trending down.<\/p>\n

\u0093I don\u0092t see the need to tighten monetary policy right now,\u0094 Mr. Fisher said. \u0093We have other things to do,\u0094 he added, noting that the Fed has been intensely focused on unwinding many of its emergency lending programs in recent months.<\/p>\n

The Dallas Fed produces its own inflation measures which weigh heavily on Mr. Fisher\u0092s outlook. Its inflation gauge uses Commerce Department measures of price changes on a wide range of consumer purchases of goods and services and trims the most volatile components. It works something like judging in figure skating, where the highest and lowest scores get thrown out. The Dallas Fed’s \u0093trimmed mean\u0094 approach shows that consumer price inflation was up 1.0% in February from a year ago, well below the Fed\u0092s goal of annual inflation in the 1.5% to 2.0%, and much lower than a rate of nearly 3% in mid-2008, when Mr. Fisher was lobbying for tighter monetary policy.<\/p>\n

\u0093We examine all of the entrails [of inflation] and what the entrails are telling us right now is that we are not seeing significant price pressures,\u0094 he says. \u0093That gives you a little bit of leeway… We\u0092ve got to make sure that we do exit in a way that doesn\u0092t create inflationary pressure, but I think that\u0092s way down the road,\u0094 he added.<\/p>\n

The Federal Reserve Bank of Cleveland<\/strong> produces a similar “trimmed mean” measure which strips out the most volatile components of the Labor Department<\/strong>’s consumer price index. It also has slowed sharply. In February, it was up 1.1% from a year earlier, compared to increases of more than 3.5% in mid-2008.<\/p>\n

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Richard Fisher, president of the Federal Reserve Bank of Dallas, built a reputation as an outspoken inflation fighter in the summer of 2008, when he lobbied the Fed to push interest rates higher to combat rising consumer prices even though the financial crisis was still raging. Bloomberg News Dallas Fed President Richard Fisher Today, inflation […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-517817","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/517817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=517817"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/517817\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=517817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=517817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=517817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}