Feb 4, 2005

Disconnect

I mentioned a disconnect between the Fed and the bond market regarding inflation. This disconnect was reflected in Greenspan's speech this AM.

The willingness of European companies to accept lower profits in the US over the past three years as the dollar has declined helped prevent inflation rising in the US, Mr Greenspan said. But he held out the prospect that import prices might soon be on the rise. Peter Hooper, chief US economist at Deutsche Bank and a former top official at the Fed, said: "The main implication is that the Fed is not quite so sanguine on inflation pass-through from the dollar as we might have been led to believe."

1 comment:

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