The U.S. Federal Reserve said that despite inflation concerns, “relatively low” interest rates may be needed “for some day,” the central bank announced Wednesday in the minutes from its most-recent assembly. At the same duration, however, the Fed raised its inflation projections for 2008.

“Several participants famous that the risks of a downturn in the economy were meaningful,” the Fed said in minutes of the January 9 and 21 conference calls and the January 29-30 policy assembly final month. “Many participants were concerned that the drop in fairness prices, coupled with the ongoing decline in house prices, implied reductions in household wealth that would likely damp consumer spending.”

Last week, in Congressional

testimony U.S. Federal Reserve Chairman Ben Bernanke indicated that the Fed will lower rates further whether financial conditions and the availability of credit deteriorate.

Also in the minutes, the Fed termed the inflation statistics since the end of the year, “disappointing.” The Fed now expects 2008 core inflation of 2.0-2.2%, up from the preceding 1.7-1.9% estimate.

Further, the Fed lowered its 2008 U.S. GDP outlook to 1.3-2.0% from the earlier 1.8-2.5%.

Continue reading Despite inflation, Fed says ‘relatively low’ interest rates essential ‘for a time’

Original post by Joseph Lazzaro

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