Fed´s Guynn wary, but not worried about inflation
Monday, January 10, 2005 6:01:27 PM
afxpress.com
Fed's Guynn wary, but not worried about inflation WASHINGTON (AFX) - Higher inflation in the United States is not an imminent risk, but Federal Reserve policymakers are watching prices carefully, said Jack Guynn, president of the Federal Reserve Bank of Atlanta
"Good central bankers stay alert to change in the inflation outlook," Guynn said Monday in a speech on the 2005 economic outlook to the Rotary Club of Atlanta. "I do not think a significant pickup in inflation is imminent," he said. However, "I will be closely watching prices and inflation expectations." A copy of Guynn's speech was made available in Washington. This year, Guynn is a nonvoting member of the Federal Open Market Committee, which determines U.S. monetary policy by setting overnight interest rates. Guynn said he expects strong economic growth to continue in 2005, which should allow the FOMC to continue to gradually raise interest rates to a more normal or neutral level. "Recent output growth has been and should remain pretty doggone good," he said. The FOMC will likely keep raising rates as long as growth holds up. "My personal view is that if the economy stays on the present path of solid growth, then rates have not yet returned to equilibrium." Guynn said too much has been made of the FOMC's efforts to communicate with markets clearly about its views on the economy, inflation and interest rates. While the Fed has stepped up its transparency, there is no explicit or implied guarantee about policy going forward
"It is not possible for the Fed to remove all 'policy risk' from financial markets," he warned. "The FOMC like everyone else can be surprised by events." |
