Fed Officials Split on Inflation Risk

Even though the recession is most likely over, the economy has certainly not become healthy again due to huge unemployment figures, weak consumer spending, and a variety of other economic issues. However, one potential problem that many analysts have begun pointing to is the risk of inflation, a risk that has Federal Reserve officials split concerning whether or not inflation could become a serious problem.

Fed officials voiced their opinions on the risk of inflation during the September 22-23 Federal Open Market Committee Meeting, the minutes for which were released today. A big question that arose during the meeting concerned whether or not the Federal Reserve should begin scaling back its efforts to support the economy in order to account for the risk of inflation.

Chairman Ben Bernanke and Vice Chairman Donald Kohn have suggested that inflation will be kept at bay in the coming months and years by the slack in the economy created by unused resources, such as idle workers and machines. However, the minutes of the meeting revealed that many members of the committee questioned whether or not the use of resources could accurately predict inflation.

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