The risk of inflation is keeping the US Federal Reserve from doing more to support the US economy, according to comments from several top Fed officials that reinforced the notion the central bank is happy to stand pat for now.
Five policymakers weighed in on Tuesday on how the US central bank intends to deal with possible threats to the economic recovery. They include volatile oil prices, Europe’s debt troubles, and a looming “fiscal cliff” of scheduled US tax increases and spending cuts.
With inflation very close to the Fed’s target of 2 percent, the officials seemed hesitant to rock the boat with more bond buying — even though unemployment remains high at 8.2 percent.
Atlanta Fed President Dennis Lockhart said inflation can run “a bit” above the Fed’s 2 percent target, but he would be concerned if it ran at 3 percent or higher, and policymakers should aim for the rate to gravitate back toward that target.
“As a practical matter, running higher inflation ... I just don’t see happening. Not intentionally,” said Lockhart, a voter this year on the Fed’s policy-setting panel, in comments at the 2012 Milken Institute Global Conference in Beverly Hills, California.
“In my mind,” he added, “the inflation target is always something that you’re always trying to gravitate toward.”
In January, the Fed took the historic step of formally setting an inflation target of 2 percent. At the same time, it made a conditional pledge to keep interest rates “exceptionally low” until at least the end of 2014 — a statement it repeated last week to help revive an economy slow to recover from recession.
Inflation is running very close to the new target. Headline inflation receded to a rate of 2.1 percent in March, though core inflation has risen slightly in the last several months.
Philadelphia Fed President Charles Plosser, speaking at a separate conference in San Diego, warned that letting inflation rise could undermine the Fed’s credibility, and would be unlikely to boost employment anyway.
“Credibility is very fragile, things can happen that you can lose it very quickly,” said Plosser, who does not have a policy vote this year. “The public has a right to expect the central bank to keep inflation near its target of 2 percent over the medium term.”
Chicago Fed President Charles Evans, opposite Plosser on the Fed’s philosophical spectrum of policymakers, urged an inflation “cushion” up to 3 percent that would let policymakers help the economic recovery along and cut the unemployment rate, which in March was still high at 8.2 percent.
The Fed has a “tremendous” amount of room to ease policy more, in part because the US is not likely to see a “burst” of inflation, said Evans, a policy dove who has long endorsed more bond buys.
In late 2008 the Fed slashed interest rates to near zero and it has bought US$2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades.
However, the US recovery, especially in jobs, has been slow and economic growth has been erratic. Still, when the Fed launched its second round of bond buying in late 2010, officials had been worried about deflation. That is no longer the case.
Last week, the central bank slightly raised its inflation forecasts through the end of 2014, a move some took to mean it was less inclined to embark on a third round of bond buys, known as quantitative easing.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained