Jeffery Lacker Sees Accelerated Inflation in Second Half of 2011
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Jeffery Lacker, Federal Reserve Chairman of Richmond, said Tuesday that inflation in the U.S. may accelerate in the second half of 2011 as firms will seek to offset higher costs for commodities and health care.
"Firms are looking to the second half to make up for some of the margin squeeze," Lacker said today in a Bloomberg Television interview. "It is not a done deal that inflation will accelerate. But it is this time in the recovery where the potential for inflation accelerating is highest."
Lacker has made his voice clear that there is no more need for the central bank to ease more than planned, adding that the Fed's efforts to push unemployment down could spark inflation.
"So while the analysis in terms of what we can expect in a couple of years in the expansion might be right on target, I am not sure we can push unemployment that much further down or more rapidly without risking inflation picking up," Lacker said.
Lacker added that the important indicator to watch is the overall reading of inflation and not the core readings that strip out the impact of food and fuel. The CPI rose 1.5 percent last year, with core prices up just 0.8 percent.
"Firms are looking to the second half to make up for some of the margin squeeze," Lacker said today in a Bloomberg Television interview. "It is not a done deal that inflation will accelerate. But it is this time in the recovery where the potential for inflation accelerating is highest."
Lacker has made his voice clear that there is no more need for the central bank to ease more than planned, adding that the Fed's efforts to push unemployment down could spark inflation.
"So while the analysis in terms of what we can expect in a couple of years in the expansion might be right on target, I am not sure we can push unemployment that much further down or more rapidly without risking inflation picking up," Lacker said.
Lacker added that the important indicator to watch is the overall reading of inflation and not the core readings that strip out the impact of food and fuel. The CPI rose 1.5 percent last year, with core prices up just 0.8 percent.
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