(September 8 – 15:35 ET) – The policy makers at the U.S. Federal
Reserve are circling each other. Markets waited with baited breath for
an afternoon by Fed chair Alan Greenspan. He managed not to spook the
markets. One of the Fed’s twelve governors and noted inflation-hawk,
Laurence Meyer, wasn’t so kind.
Speaking to the Philadelphia Council for Business Economics at the
Federal Reserve Bank of Philadelphia, Meyer managed to resurrect the
spectre of interest rate hikes, erasing the market’s gain and sending
it downward all over again.
Meyer actually passed on his planned speech. Instead asked himself a
few fundamental questions out loud and then answered them.
In this digression Meyer, warned of inflationary signs from the labour
market. He said “it appears that there is excess demand in the labor
market” and further that “there is a risk that excess demand in the
labor market will put the economy on a path of rising inflation.”
He said there are hints that “wage pressures may be building.”
-IE Staff
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