MARKET TALK: Fed's Walking a Tightrope
Reprinted from Dow Jones NewswireJune 26, 2008
The Fed is caught in "one heck of a tension" right now, being pulled by commodity prices and inflation in one direction but also by the weak economy and financial system in the other, Eliot Kalter says, which is one reason for yesterday's tightrope act. Also, it would've been unsettling for the central bank yesterday to start raising rates so soon after finishing a cutting regime, says Kalter, senior fellow with the Center for Emerging Market Enterprise at The Fletcher School. For now, expect the Fed to continue trying to manage inflation expectations, and all eyes should be on wage growth, but don't count on a hike this year, he says.