San Francisco, May 9 (Bloomberg) -- Inflation is poised to
accelerate and Federal Reserve policy-makers need to act to keep
inflation expectations in check, two central bankers said today.
As a result, investors may be correct to expect the Fed to
raise the overnight bank lending rate by a half percentage point
when they meet next week, said Robert Parry, president of the Fed
Bank of San Francisco.
``The futures markets would suggest that we're going to move
more aggressively,'' Parry said. And while the Fed has raised the
overnight rate five times since June -- each time in quarter-point
steps -- a half-point increase may still be consistent with the
gradual approach so far, he said in a San Francisco speech.
``I think we've moved cautiously, but that doesn't mean we
only have a single note to play,'' Parry said. ``I'm not sure I
would consider a second note as being inconsistent with caution.''
Moreover, the Fed must maintain a public stand against
accelerating price increases ``so that inflation expectations are
also relatively low,'' said Fed Vice Chairman Roger Ferguson, in a
separate San Francisco speech. The priority of the Fed is to
maintain ``an obvious stance of vigilance,'' he said.
The comments of Ferguson and Parry -- both of whom will vote
at the May 16 meeting of the Fed's policy-setting Open Market
Committee -- suggest the central bank will decide to do what
investors have already concluded it will.
Trading in June fed funds futures contracts suggests most
investors expect the FOMC to raise the overnight rate a half point
to 6.5 percent in June from the current 6 percent. ``The market's
priced this thing in, and the Fed would be foolish to turn its
back on it,'' said Tim Rogers, an economist at Briefing.com.
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: auch ich denke den mai hatten wir schon und die zinserhöhung wir derzeit eingerechnet