Rate Hike. Inflation Fighting?Submitted by Grunden Financial Advisory, Inc on February 19th, 2010
Disclosure: Every investor’s situation is different and investment decisions are best made within the context of a financial plan. Consult your professional advisor. Comments reflect our opinion only and not intended for financial advice.
The US consumer represents 70% of our economy. As long as there is 10% official unemployment and estimates as high as 17%, the Federal Reserve (Fed) is fighting deflation. The high price of gold represents the fear of future inflation, but for now it is not in the numbers (US Core Prices Drop, Wall Street Journal, 2/19/2010. WSJ subscription needed). The rate hike at the discount window is a step to get banking back to a more normal approach (Rate Rise Stirs Question, Wall Street Journal, 2/19/2010. subscription not needed).