Difference of opinion
THE outcome wa never in doubt. On December 12th America central bank kept hortterm interet rate unchanged at 5.25%. What mattered wa the tatement accompanying the Federal Reerve deciion. Although Ben Bernanke and hi colleague gave a nod to the lowing economy , they repeated that they till conidered inflation a bigger worry than weak growth.
That i not what Wall Street ha been thinking. According to the latet Blue Chip monthly urvey, four out of five financial forecater reckon the central bank next move will be to cut the federal fund rate. Some once optimitic eer have been buy cutting their growth forecat. The price of fed fund future ugget that financial market ee a 20% chance of lower interet rate by April. Thi had been cloe to 70%, but unexpectedly h2 growth in job and then retail ale in November ha caued ome in the market to think a rate cut le likely.
The central banker are imultaneouly more cautiou and more optimitic than many on Wall Street. With core inflation till well above the 12% rate they unofficially deem appropriate, Mr. Bernanke and hi colleague are genuinely worried about price preure. Although fuel cot have fallen harply, core conumer price, which exclude the volatile categorie of food and energy, till roe by 2.8% in the year to October. The Fed preferred price gauge, the core peronal conumption deflator, went up by 2.4% in the year to October, only a little hort of the fatet pace for a decade. With inflation till too high, cautiou central banker ee cant reaon for abandoning their hawkih rhetoric.由好作网www.hAOzuowEn.com整理