Inflation for Christmas

From the Wall Street Journal:

“If crude oil prices stay at current levels, U.S. consumer price inflation could hit a 16-year high of 5% by the end of the year, an analysis by London-based Capital Economics has concluded…”

“Inflation at that level, if sustained, could be both a wallop to consumer purchasing power, and a warning light to the Federal Reserve which has signaled it is paying more attention than usual to the inflationary implications of energy.”

From MSNBC:

“A number of regional Fed presidents feel particularly strongly about inflation risk. They acquiesced in the initial 50 basis point cut, but signalled serious reservations about the latest rate cut.

The October 31 Fed statement says ‘recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation’.”

Also from MSNBC:

“’The Fed is caught between a rock and a hard place as the dollar weakens and the economy faces headwinds from higher oil prices and financials tightening credit standards,’ said Gerald Lucas, at Deutsche Bank…”

“…’It puts the Fed in the box over cutting rates,’ said Marc Pado, chief market strategist at Cantor Fitzgerald. ‘How do you cut rates to save the financials when the dollar is getting killed? That's the crux of the whole matter.’”

From Forbes:

“… Warsh sees equally-real inflation threats. The recent readings have been 'favourable,' he said but the higher prices of crude oil and other commodities 'will likely put upward pressure on overall inflation in the short run.'”