March 24 (Bloomberg) -- Federal Reserve Governor Frederic Mishkin, the newest member of the central bank's board, said inflation is poised to recede only ``gradually'' given the recent rise in fuel and energy prices.
The Fed's most closely watched measure of inflation should slow to about 2 percent from the current 2.25 percent, Mishkin said during a speech in San Francisco. Moving it below that would be difficult without a shift in monetary policy, he added .
In other words, the better than expected housing numbers (which might not last given credit tightening fallout) might have put a lid on lower rates dreams. Hence my argument that the markets could be in a lose/lose situation for a few more weeks (if Feds lower, it would indicate real fear for the economy). Earnings will have to justify further gains.
The Fed's most closely watched measure of inflation should slow to about 2 percent from the current 2.25 percent, Mishkin said during a speech in San Francisco. Moving it below that would be difficult without a shift in monetary policy, he added .
In other words, the better than expected housing numbers (which might not last given credit tightening fallout) might have put a lid on lower rates dreams. Hence my argument that the markets could be in a lose/lose situation for a few more weeks (if Feds lower, it would indicate real fear for the economy). Earnings will have to justify further gains.
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