Here's something you haven't been hearing everyday, from Minneapolis Fed president Gary Stern, via John Berry:
Gary Stern, president of the Minneapolis Federal Reserve Bank, is about as relaxed regarding inflation as a central banker can be.
"I don't think we face a great threat of accelerating inflation,'' Stern said in a March 3 interview. "We have had a lengthy period of low inflation -- whether you want to call it a period of price stability is splitting hairs -- and I don't think we are at a great risk of departing from that.''...
``I don't think our credibility at this moment is at particular risk. We are always making decisions with a fair amount of uncertainty'' and the market knows that, he said...
Stern also was not worried that tighter labor markets, as indicated by the gradual decline in the unemployment rate to January's 4.7 percent level, could cause increases in workers' pay to take off and push up inflation. Minutes of the Jan. 31 FOMC meeting said some members were concerned that "a further rise in resource utilization'' -- that is, an additional decline in unemployment -- could potentially add to inflation pressures.
"I have never been a big fan'' of the concept that if unemployment falls below a certain level that compensation and ultimately inflation will rise, he said. Research at the Minneapolis Fed has found little predictive power regarding inflation from changes in joblessness, he added.
"So I am not as surprised as some about labor markets not providing much evidence about prices. We have had employment growing steadily for some time and the unemployment rate fall but compensation has not been increasing,'' Stern said.
I'm with President Stern on that one.