Thursday, February 15, 2007

Federal Doves

Bernanke and the Gentleman from Massachusetts spar on inflation. Frank is concerned over the Fed Chairman's concerns about inflation. Why isn't growth doesn't count for more.

However, I am left wondering why the FED has been so dovish on inflation. This year once again inflation is expected to come in above the Fed's unofficial target of 2%. IN my humble view the new flat yield curve is a sign that no matter what happens in the short-term investors are becoming ever more confident that over the long haul inflation will be tame.

This is a good thing and should be supported by an ever hawkish stance against raising prices.