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Thursday, March 17, 2011

"What Planet is Ben Bernanke Living On?" - SBE Council Economist on Latest Inflation Numbers

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), offered the following statement in reaction to the CPI inflation numbers released this morning by the U.S. Bureau of Labor Statistics:

"What economic planet is Fed Chairman Ben Bernanke living on? The FOMC declared on Tuesday that longer term inflation expectations remain stable and underlying inflation pressures are subdued. Really?

"The latest data show that CPI inflation hit a hot 0.5% in February. Over the past six months, annualized inflation came in at 3.6%, and over the past three months, the annualized inflation rate reached 5.2%.

"While Ben Bernanke would like to point blame elsewhere, in the end, inflation is always a monetary phenomenon, that is, a failure of monetary policy. The Fed has been running historically loose monetary policy since September 2008, and pledges to continue to do so. No one should be surprised that inflation has picked up, and little reason exists to expect future inflation to be tame given that the key underlying inflation pressure is overly expansive monetary policy."

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