Tuesday, August 12, 2003

The fact that the Fed kept the federal funds rate steady at 1.0% is no news. Even a blind man could see that slow-moving elephant coming.

No, the real note of interest is buried in the press release:
Business pricing power and increases in core consumer prices remain muted. . . .

the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future.
See, I told you the deflation watch wasn't over. The July inflation numbers don't come out until Friday, but I wonder if Alan & Co. got a little peek at the data.


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