Fed Claims They Will Get Tough Against Inflation

Maybe even tougher than lowering the interest rates, creating money out of thin air, destroying the Dollar and stop publishing the monthly report on M3 because of skyrocketing Inflation! – The Infinite Unknown
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Top Federal Reserve officials on Tuesday hammered home the U.S. central bank’s determination not to allow inflation to get out of control, cementing views that interest rates will rise later this year.

The remarks by two regional Fed presidents followed hard-line comments on Monday from Fed Chairman Ben Bernanke that the U.S. central bank would “strongly resist” any deterioration in inflation expectations. Analysts and markets viewed the comments as a sign the Fed — like other central banks — was turning its sights on inflation.
(It’s sometimes very enlightening to have a closer look at ones own creations. – The Infinite Unknown)

Dallas Federal Reserve Bank President Richard Fisher, who solidified a reputation as one of the most hawkish members on the Fed’s interest rate-setting Federal Open Market Committee with three dissents against steep rate cuts, echoed Bernanke.

“We want to make sure the message is clear … that we will not countenance building inflationary expectations,” he told the Council on Foreign Relations in New York.

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Oil hits new high as Israel calls strike on Iran ‘unavoidable’

Oil prices leaped to record highs yesterday as Israel warned about Iranian nuclear sites and the dollar slumped on the biggest jump in American unemployment for 22 years.

The global crude price ended a run of lower prices earlier this week as it jumped by more than $9 a barrel to $136.79 (£69.44) – it has risen by over $14, or 10%, in just two days. The week before last saw an all-time high of $135.09 a barrel but, by Wednesday this week, prices had receded to as low as $122.

Already jittery oil markets were sent into spasms by remarks from Israel’s transport minister that an attack on Iranian nuclear sites looked “unavoidable”. Iran is a big Opec oil producer and any attack on the country would threaten oil supplies from the whole region.

Prices were also boosted by a prediction from investment bank Morgan Stanley that crude prices might reach $150 by July 4.

Earlier in the day the dollar – in which oil is priced – had fallen against the euro partly on speculation that the European Central Bank might consider raising interest rates to curb inflation.

But subsequently markets were rocked by a monthly report from the US showing that unemployment suffered its biggest monthly rise since February 1986.

Shares on Wall Street dived after the US unemployment rate unexpectedly??? jumped to 5.5%, intensifying fears that the world’s biggest economy is sliding into recession.

The Dow Jones industrial average lost nearly 300 points, or 2.2%, to around 12,320. In London the FTSE 100 closed the week down 1.5%, or 88 points, at 5,906.

Read moreOil hits new high as Israel calls strike on Iran ‘unavoidable’

Eurozone inflation reaches 16-year high

Eurozone inflation surged to the highest rate for 16 years on the back of sharply higher oil prices as consumer spending in the 15-country region showed further signs of weakness.

Annual inflation in the eurozone reached 3.6 per cent in May, according to official data released on Friday, up from 3.3 per cent in the previous month. That appeared to rule out any chance of an early cut in interest rates by the European Central Bank, which aims to keep inflation “below but close” to 2 per cent.

Evidence also emerged that higher prices were wreaking economic damage by forcing households to retrench. Germany reported a surprise 1.7 per cent drop in April retail sales, extending a 2.2 per cent fall in March.

This week, the European Commission reported eurozone consumer confidence had plunged in May to its lowest level for almost three years.

As well as driving inflation higher, the soaring cost of fuel has led to Europe-wide protests this week – with fishermen blocking ports in France and on Friday giving out fish free in Madrid.

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Fed joins with European banks to battle credit crisis

WASHINGTON (AP) — The Federal Reserve announced Friday that it will expand a series of efforts to deal with the global credit crisis, in coordination with European central banks.The Fed said it was boosting the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, from the $100 billion it supplied in April. The Fed took this action and several other moves to boost credit in coordination with the European Central Bank and the Swiss National Bank.

The latest moves are part of a series of actions the Fed has made since the credit crisis struck in August.

The efforts are designed to increase reserves so that banks don’t become hesitant about lending to consumers and businesses, which would make the current economic slowdown even more severe.

(The continuing bailouts are destroying the dollar and will create a total crash very soon. – The Infinite Unknown)

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Federal Reserve may Want Inflation

We are now importing inflation. This does not only apply to the cost of commodities, such as oil, but also to consumer goods imported from Asia. This is a newer trend as, in our analysis, Asia had been exporting deflation until the summer of 2006; since then, we have seen increased pricing power by Asian exporters.

Inflation is not just a U.S. phenomenon; as Asian economies are far more dependent on agricultural and industrial commodities, rising inflation may become a serious concern in the region. The stronger and more prudent Asian central banks may realize that allowing their currencies to float higher versus the U.S. dollar may be the most effective way to combat inflationary pressures.

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The Collapsing Dollar – Authorities lose patience

Jean-Claude Juncker, the EU’s ‘Mr Euro’, has given the clearest warning to date that the world authorities may take action to halt the collapse of the dollar and undercut commodity speculation by hedge funds.


Jean-Claude Juncker, who is calling for Washington to
take steps to halt the slide of the dollar

Momentum traders have blithely ignored last week’s accord by the G7 powers, which described “sharp fluctuations in major currencies” as a threat to economic and financial stability. The euro has surged to fresh records this week, touching $1.5982 against the dollar and £0.8098 against sterling yesterday.

“I don’t have the impression that financial markets and other actors have correctly and entirely understood the message of the G7 meeting,” he said.

Mr Juncker, who doubles as Luxembourg premier and chair of eurozone financiers, told the Luxembourg press that he had been invited to the White House last week just before the G7 at the urgent request of President George Bush. The two leaders discussed the dangers of rising “protectionism” in Europe. Mr Juncker warned that matters could get out of hand unless America took steps to halt the slide in the dollar.

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Dollar’s nosedive stirs joint intervention jitters

TOKYO (Reuters) – The dollar’s sharp slide to 13-year lows against the yen and fresh all-time lows versus the euro on Monday is stoking jitters about the possibility of joint central bank intervention to prop up the dollar.”The speed of the slide in the dollar/yen is so rapid that U.S. action alone can no longer stop the dollar’s downward trend,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investment.

“The time is ripe for coordinated intervention by U.S., European and Japanese authorities.”

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Fed Prints Another $200 Billion Out Of Thin Air

World central banks unite to ease credit strain

WASHINGTON (Reuters) – The U.S. Federal Reserve and four other central banks on Tuesday teamed up to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans.

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Stocks surged, bonds fell and the long-suffering U.S. dollar soared in reaction to the moves, a sign financial markets saw the plan as a step in the right direction to ease a crisis that has threatened world economic growth. The Dow Jones industrials closed nearly 3.6 percent higher.

In the latest effort to ease a credit contraction that has disrupted global finance, the Fed, Bank of Canada, Bank of England, European Central Bank and Swiss National Bank announced a series of aggressive measures to boost liquidity. It was the second time in three months that central banks from around the globe had launched coordinated efforts.

Wall Street economists were quick to call the new lending facility a step in the right direction, but what’s most needed is time for the de-leveraging of billions of dollars in loans globally.

Read moreFed Prints Another $200 Billion Out Of Thin Air