I think this time they are heavily debating. Bernanke hoped his tough talk on inflation would quell inflation expectations, just as his admittance of the social security problem is meant to wake us up to not rely on SS for retirement. It’s all about setting *expectations*. His tough talk did most of the job, but not all. Inflation is still creeping in, and despite the slowing economy, the Fed’s main job, their #1 goal, is PRICE STABILITY.
With that goal not lined up, one more raise.
The people who say the Fed is not tough on inflation are wrong. I think they are tough on inflation.
I should qualify: they are tough on inflation only when it shows up in the CPI, because that is the number that anchors people’s expectations and alters their behavior. So with the CPI going up, manufacturers are raising their prices, and with oil going up, they are passing along higher costs.
But one question: If the Fed shows they are tough on inflation, how can that possibly keep companies like lindismith’s from raising their prices and passing along higher energy costs? Do they think that higher prices will reduce consumer demand enough that energy prices will not feed through to higher consumer prices? How is that possible?
So I will go on the record as saying one more raise.
