Fed officials see nagging risks to inflation

Federal Reserve officials underscored concerns on Thursday about nagging upside risks to inflation, especially given a wave of strong data including signs that a housing slowdown may be moderating.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

Such data and upbeat views on the economy from Fed officials have prompted financial markets to push back expectations for any eventual cut in U.S. interest rates to later in 2007.

Fed Governor Susan Bies and Cleveland Fed President Sandra Pianalto, who is not a voting member of the policy setting
Federal Open Market Committee in 2007, delivered a similar upbeat message in comments on Thursday.

Fed Chairman Ben Bernanke also spoke, but he steered clear of the interest rate debate in an appearance on Capitol Hill, instead warning lawmakers of the long-term dangers posed by fiscal deficits.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

The FOMC next meets on January 30-31 and policy-makers are widely expected to hold the key fed funds rate steady at 5.25 percent.

The rate has been on hold for four straight meetings. The Fed last raised it in June, the 17th in a string of rate hikes dating back two years.

Pianalto failed to rule out that the Fed could make another rate increase at some point, as some in the financial markets have come to suspect.

There is a risk underlying inflation will not improve and the Fed will have to act, she said during a speech in Dayton, Ohio.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

Bies also pointed to inflation risks.

"Inflation appears poised to decelerate in coming months as energy prices stabilize and resource pressures ease," she said in a speech at the University of Arizona.

"But a decline in the inflation rate is not assured," she said, noting that relatively tight labor markets mean companies could pass on higher costs to consumers.

Bies later told reporters said she was watching closely for possible wage inflation at a time when the economy, outside of housing, is "still running at a good pace."

How much the jobs market affects inflation depends largely on how strongly productivity growth can run, Bies said.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

WORST OVER FOR HOUSING?

Earlier, Pianalto said she expected productivity growth to remain strong, but noted that growth in the U.S. workforce has started to slow a bit as the population ages and the youngest adults wait longer before entering the labor pool.

Indeed, Bies said that as more of the baby-boom generation retires, the United States in a year or so will need to add only about 110,000 non-farm payroll jobs each month to keep up with workforce growth, compared with about 140,000 in 2006.

Weakness in U.S. home building appears not to have spilled over to other sectors, Bies said.

For now, the worst of the housing slowdown seems to be over, although the process of working off bloated inventories of unsold homes will be highly variable across the United States, she said.

Low interest rates, growth in employment and real incomes, and wealth generated by stock market gains should support housing demand, she said.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

Earlier on Thursday, the
Commerce Department reported a 4.5 percent jump in December housing starts, a second straight monthly increase that ran contrary to analysts' expectations.

And in spite of slowing gains in house prices, consumers' urge to spend should be spurred by falling energy prices and tight job markets, Bies said.

Pianalto said a sharp decline in building permits suggested investment in new housing will remain weak, at least through the first half of 2007.

"I see the economy growing at a more moderate pace over the next few years than we saw in the past couple of years," she said.

Risks remain both that the weakness in housing could infect other parts of the economy, and that inflation could remain stubbornly high, Pianalto said.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News

ON THE HILL

Fed Chairman Bernanke went before the Senate Budget Committee, his first testimony since Democrats took control of Congress. He is expected to testify on Fed policy in mid-February.

He warned lawmakers that failure to act soon to deal with the budgetary strains posed by an aging U.S. population could lead to serious economic harm.

"We are experiencing what seems likely to be the calm before the storm," Bernanke said.

"If early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," he added, citing worrisome long-term projections on the cost of programs such as
Social Security and Medicare.
Celebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPolitics NewsSports NewsTop Stories NewsCelebrities NewsCrimes and Trials NewsEntertainment NewsHealth NewsHi-Tech NewsInternational NewsPoliticsSports NewsTop Stories NewsCelebrity DietsMat ExercisesMind And Body NewsNewsNutritionPilatesYogaBusiness NewsCelebrities NewsEntertainment NewsHealth NewsInternational NewsPolitics NewsSports NewsTechnology NewsTop Stories News