SBE Council Economist on Latest Inflation Numbers and Fed Policy

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 on October 19 by the U.S. Bureau of Labor Statistics:

"Nothing positive could be found in the CPI inflation data released today. The CPI Index increased by 0.3 percent in September. Looking at the past three months, annualized inflation ran at about 4.8 percent. For the past year, inflation hit 3.9 percent.

"Ben Bernanke and his colleagues at the Federal Reserve need to wake up. It's time to remember and act according to some basic economic realities. First, inflation ultimately is a monetary phenomenon, so fingers cannot be pointed anywhere else on this increase in inflation.

"Second, the unprecedented loose monetary policy that the Fed has been running for three years now has done nothing to aid real economic growth. That's not surprising, since individuals, investors and business owners understand that this is government trying to manipulate the economy with no real, lasting impact on income or wealth. To the contrary, given the resulting inflation, real income and wealth ultimately will suffer due to loose monetary policy.

"Third, in order to avoid matters getting worse, the Fed needs to refocus on price stability, which both in the near term and over the long haul will be far more beneficial for the economy."