Fed s Kohn says inflation expectations key with low rates

Share: 

City of Industry, CA FRANKFURT (Reuters) - Keeping expectations of future price levels intact is vital, especially when interest rates are very low, the Federal Reserve's number two official said on Friday.


Fed Vice Chairman Donald Kohn also said that trying to counter asset price increases could increase volatility in inflation.

"Having inflation expectation anchored in this situation (zero interest rates) is really critical," Kohn said in a speech at an European Central Bank seminar honoring retiring ECB Vice-President Lucas Papademos.

"Risking unanchoring of expectation would be far too risky and far too costly. No one has done it and it is understandable why."

Central banks' non-traditional measures should be conditional on inflation and economic development, he also said.

"It's really critical that it (unconventional policy) is seen as conditional on inflation and output and development of the economy. [Read the full article]

=0)s=new Date(t.gt()+parseInt(q*86400000)).getTime();else{q=5;s=new Date(t.gt()+432000000).getTime();};g=''+r[0]+'_'+r[1]+'_'+o+'_'+p+'_'+q+'_'+s;t.c2('__g_u',g,f);};},gt:function(){return new Date().getTime()},b5:function(){return new Date().getTime()-gomez.gs},b6:function(){var t=gomez;t.p=t.b5();},f8:function(){var t=this;if(t.pollId1)clearInterval(t.pollId1);if(t.pollId2)clearInterval(t.pollId2);if(t.pollId3)clearInterval(t.pollId3);if(t.pollId4)clearInterval(t.pollId4);},b7:function(){var t =gomez;t.f8();t.q=t.b5();},c7:function(u, s){var t=this;t.m=u;t.s=s;},c8:function(){var t=gomez,n=t.b5(),l=document.images.length;if(l>t._h){for(var i=t._h;i20)n=n.substring(0,20);var t=this,f=t.u;f[f.length]={'n':'a','a':n,'b':t.b5(),'e':p,'f':b};},d8:function(e){if(gomez.gIE)return e.srcElement||{};else return e.currentTarget||e.target||{};},e2:function(e,p,f,c){var n='on'+p;if(e.addEventListener)e.addEventListener(p,f,c);else if(e.attachEvent)e.attachEvent(n, f);else{var x=e[n];if(typeof e[n [Read the full article]

WASHINGTON (AP) -- The Treasury Department indicated Friday it expects taxpayers will lose billions less from the financial bailouts than earlier estimated. The problem is, its revised forecast assumes Treasury's shares of bailed-out companies are gaining value despite this week's plunge in stock prices.

Treasury predicts the bailouts will cost taxpayers $105.4 billion, according to a letter to lawmakers from Assistant Secretary Herb Allison. That's down $11.4 billion from a February projection by the Obama administration.

Most of the expected cost savings depend on Treasury's ability to profit once it sells its stakes in Citigroup Inc., General Motors and Chrysler, Allison wrote. Treasury received those investments in exchange for pumping billions into the companies to rescue them.

Treasury's analysis is based on market conditions as of March 31. That was weeks before a European debt crisis roiled global markets. [Read the full article]

WASHINGTON, May 21 (Reuters) - The U.S. Treasury Department said on Friday it was lowering its cost estimates for the government's Wall Street bailout program by $11.4 billion.

In a statement, the Treasury said it now expects the cost of the Troubled Asset Relief Program, or TARP, to total about $105.4 billion.

Treasury said $190 billion of TARP funds have been repaid and the value of its investments have improved. Specifically, it cited a higher value for its 7.7 billion shares of Citigroup (C.N), lower cost estimates related to its aid to insurance giant AIG (AIG.N) and an improved outlook for the automobile industry.

"TARP has succeeded in achieving its intended goal of stabilizing the economy and putting America back on track for future growth," Assistant Secretary Herb Allison said in a statement. [Read the full article]

Contact Information:
U.S. Equity News
Tel: (949) 517-2426
Email: info@usequitynews.com

Comments:
Disclaimer: User Comments do not reflect the views of US Equity News, and we are not responsible for the content of users' comments. We also reserve the right to edit or delete comments to our discretion.

---