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20 Jun 2013
Flash: Concerns about Inflation - Nomura
FXstreet.com (London) - A panel of analysts at Nomura said that the recent declines in headline and core PCE inflation to around 1% y-o-y and sharp declines in inflation breakevens had raised questions about whether or not concerns about excessively low inflation would affect the FOMC debate.
They explained that President Bullard of the Federal Reserve Bank of St Louis had expressed this concern most forcefully in the run up to the meeting. It appears to them that the rest of the FOMC does not share these concerns, or at least not to the same degree. They noted that Bullard actually dissented from the FOMC decision citing the concern that the Committee was not showing strongly enough its “willingness to defend its inflation goal.” They are somewhat surprised that his views are so far out of the mainstream that it resulted in a dissent.
They explained that President Bullard of the Federal Reserve Bank of St Louis had expressed this concern most forcefully in the run up to the meeting. It appears to them that the rest of the FOMC does not share these concerns, or at least not to the same degree. They noted that Bullard actually dissented from the FOMC decision citing the concern that the Committee was not showing strongly enough its “willingness to defend its inflation goal.” They are somewhat surprised that his views are so far out of the mainstream that it resulted in a dissent.