When Will Ben Bernanke Blink? Is the Federal Reserves Rate Raising Fight Against Inflation Going Too Far?
There is a lot of speculation and debate among economists about whether the Federal Reserve will raise the Feds short term interest rate to 5% in their meeting on Wednesday. If they do, it will make 16 straight jumps of .25%, since it reached its low point of 1%. Most people seem to feel that statements by Fed Chairman Ben Bernanke have sent mixed signals about whether or not this meeting will be the time for a pause. Or, will they keep consistently raising rates through the rest of the year? No one at the Fed seems willing to commit to an answer. This is no surprise, considering the economy seems to be sending mixed signals as well, and although the risk seems small, some economists fear a pause in rate increases would trigger a rapid increase in inflation.
One problem with judging how far to go with a rate based battle against inflation is the fact that many economic indicators take months to show their full impact. Recent decreases in retail jobs, coupled with increases in manufacturing, apparently caused a sharp jump in the average hourly wage last...
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