Fed's Fisher Says U.S. Inflation Expectations Rising

English: Federal Reserve Bank of Dallas Houston Branch (Photo credit: Wikipedia)

Sept.19 swing trading .- Federal Reserve Bank of Dallas President Richard Fisher said the central bank’s third round of large-scale asset purchases has led to an increase in market expectations for higher inflation without more job creation.
“I do not see an overall argument for letting inflation rise to levels where we might scare the market,” Fisher said on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “We have seen a sharp rise in inflation expectations. If you let this get out of hand, then I think we will have a market reaction.” Fisher, who doesn’t vote on monetary policy this year, opposed the Federal Open Market Committee decision last week to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing. The Fed, led by Chairman Ben S. Bernanke, is seeking to boost growth and reduce 8.1 percent unemployment.

“A sustained increase” in inflation expectations “would suggest incipient doubts about our commitment to the Bernanke doctrine of sailing on a course consistent with 2 percent long- term inflation,” Fisher said in the text of a speech prepared for delivery later today in New York.

Price Increases

The five-year, five-year forward break-even rate, which projects the pace of price increases starting in 2017, rose to 2.88 percent on Sept. 14, the day after the FOMC decided on QE3. That was up half a percentage point from July 26. It dropped to 2.80 percent on Sept. 17. ... Continue to read.

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