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Reply #10: Fed's Ferguson says Fed must maintain credibility [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-19-05 07:01 AM
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10. Fed's Ferguson says Fed must maintain credibility
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-10-19T001035Z_01_WBT004037_RTRIDST_0_ECONOMY-FED-FERGUSON-INFLATION-URGENT.XML

NEW YORK, Oct 18 (Reuters) - The Federal Reserve must maintain its credibility in the face of inflationary pressures, Federal Reserve Vice Chairman Roger Ferguson said on Tuesday.

"The issue of keeping inflationary expectations well anchored is an extraordinarily important part of what we need to do," Ferguson told an African American business group in Trenton, New Jersey. His comments were monitored in New York.

Ferguson said inflation was as much as source of pain to lower and middle-income Americans as to those with higher incomes, noting that it ultimately affected economic growth and employment.

Ferguson said contained inflationary expectations were at last partly responsible for low long-term interest rates.

"We all get the benefit in that the belief that inflation is contained has allowed the long end of the curve to be lower than it would have been otherwise," he said.

He also said there were a number of hypotheses for the slow pace of business investment in equipment and software in the United States, among them higher energy costs, excess capital and corporate scandals.

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