Posted by WARREN MOSLER on 11th June 2008
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by Pedro Nicolaci da Costa
(Reuters) A steady rise in energy prices has fueled an inflationary psychology in the United States and could be a problem if it does not reverse, Federal Reserve Vice Chairman Donald Kohn said on Wednesday.
Seems this means the Fed has to act to get it to reverse- a rate hike at the June meeting will be on the table.
“Repeated increases in energy prices and their effect on overall inflation have contributed to a rise in the year- ahead inflation expectation of households,” Kohn said in remarks prepared for delivery to a conference organized by the Boston Federal Reserve Bank in Chatham, Mass.
Kohn said evidence that longer-term inflation expectations have edged up is a particular worry.
“Any tendency for these longer-term inflation expectations to drift higher or even fail to reverse over time would have troublesome implications for the outlook for inflation,” he said.
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Posted by Sada Mosler on 11th June 2008
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Highlights
| French Inflation Accelerates to 12-Year High of 3.7% |
| Spain’s Core Inflation Accelerated in May as Food Costs Surged |
| Germany’s Weise Says Unemployment May Fall More Than Expected |
| Stark Says ECB Not Talking About Series of Increases |
Doesn’t mean they won’t do it.
| ECB’s Liikanen Sees Inflation Expectations Rising |
If inflation expectations remain elevated.
| Spain, Portugal, Italy Worry About Rate Increases, WSJ Says |
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Posted by Sada Mosler on 11th June 2008
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| Survey |
n/a |
| Actual |
376.2 |
| Prior |
333.6 |
| Revised |
n/a |
Moved up off the ‘bottom’ of the ‘new range’ and moving the same direction as pending home sales that surprised on the upside.
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| Survey |
n/a |
| Actual |
1622.1 |
| Prior |
1496.1 |
| Revised |
n/a |
Muddling through. Most of the resets have are now history.
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| Survey |
n/a |
| Actual |
21.01 |
| Prior |
22.73 |
| Revised |
n/a |
Global inflation cutting into consumer buying plans.
In some ways this conflicts with expectations theory that theorizes that consumers will accelerate purchases if they expect higher prices.
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| Survey |
-$164.5B |
| Actual |
-$165.9B |
| Prior |
-$67.7B |
| Revised |
n/a |
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Federal Debt Percent GDP
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