Fed Underestimated Debt Impact, Focused on Inflation |
| Bloomberg - Aug 29, 2007 |
Federal Reserve officials, underestimating the impact of credit-market turmoil, focused at their Aug. 7 meeting on inflation and slowing productivity.
Minutes of the session released yesterday showed that the Fed was intent on securing credibility as an inflation fighter just 18 months into Chairman Ben S. Bernanke's term. Even though the central bank cut the discount rate on Aug. 17, the emphasis on prices forms the backdrop for deliberations next month.
Investors now anticipate policy makers will lower the benchmark rate by a quarter point to 5 percent at or before their Sept. 18 meeting. Anxiety about inflation may keep officials from a larger reduction, or discourage them from signaling a series of cuts, according to some economists.
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- Posted: 2007-08-29 09:24:17
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