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Fallout: The Financial Crisis

Fed: There’s little risk of inflation

Janet Babin Feb 19, 2009
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Fallout: The Financial Crisis

Fed: There’s little risk of inflation

Janet Babin Feb 19, 2009
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TEXT OF STORY

Steve Chiotakis: Analysts predict wholesale prices will likely have gone up, when we
get the latest report this morning. That means inflation could be on the rise, too. But the Federal Reserve doesn’t seem too concerned. From North Carolina Public Radio, here’s Marketplace’s Janet Babin.


Janet Babin: Here are the highlights of the Fed’s latest economic predictions: unemployment could climb to 8.8 percent, and the economy will contract all year long. That hasn’t happened since 1991.

In a speech to the National Press Club in Washington yesterday, Fed Chairman Ben Bernanke talked about one of the few upsides of this down economy:

Ben Bernake: With global economic activity weak and commodity prices at low levels, we see little risk of unacceptably high inflation in the near term. And indeed, we expect inflation to be quite low for some time.

Bernanke says that the Fed is responding to the financial crisis with innovation — like its plan to buy up to $100 billion in debt from Fannie Mae and Freddie Mac, and up to $500 billion in mortgage-backed securities.

Over this year, he promised that the Fed would improve its transparency, so the country has a better understanding of what its doing.

I’m Janet Babin for Marketplace.

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