Fed hawks worry about threat of inflation


By Ann Saphir and Alister Bull – In remarks that stamped her as a hawk on the Fed’s policy-setting committee, Kansas City Federal Reserve President Esther George warned that the Fed’s near-zero interest-rate policy – aimed at boosting the economy – could spark inflation.

“A prolonged period of zero interest rates may substantially increase the risks of future financial imbalances and hamper attainment of the 2 percent inflation goal in the future,” she said in her most extensive remarks in a year on policy.

St. Louis Fed President James Bullard, who votes as well this year on U.S. monetary policy, also warned about the potential for inflation, although he noted that inflation was so far running under the Fed’s 2 percent goal. more> http://tinyurl.com/bx3k9y7

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