Skip to comments.Fed officials leery of unconventional policies
Posted on 03/27/2010 12:37:33 PM PDT by mlocher
WASHINGTON (Reuters) - The Federal Reserve's unprecedented dose of stimulus to the economy during the recent financial crisis complicates the task of pulling back when the time is right, top central bank officials said on Friday.
Fed Board Governor Kevin Warsh argued that tame inflation readings today should not make policymakers complacent about the risk of future price increases.
"Inflation expectations will be anchored until they are not," Warsh said in a speech in New York. "Central bankers would be prudent to keep a very open mind about shocks that could happen domestically and overseas."
Ben Bernanke, Fed chairman, told Congress on Thursday that the central bank is aware of such risks and has the tools necessary to withdraw monetary stimulus in time.
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Some suggest the Fed should begin selling its Mortgage Backed Securities. How much would they have to be discounted given today's economic realities and runaway federal spending?
Inflation is in check until it is out of control. Their chanced of getting this transition right with Obama and the Rat congress spending like there is no tomorrow are slim.
Get ready for a big dose of inflation.
Add to that high unemployment.