In all, the factors weighing on the economy are the same factors which are likely to hold down any inflationary pressure in the U.S. One factor that I have not mentioned, but will briefly, is the possibility of inflationary pressures on the U.S. debt.
But what central banker would risk being blamed for causing a recession, particularly when inflationary pressure in advanced economies appears low?
Moreover, points out Teun Draaisma of Morgan Stanley Dean Witter, there is less inflationary pressure in Europe and the euro looks steady.
Moreover, although there are signs of inflationary pressure in the labour market and the housing market, the economy does not seem to be overheating as it did in the late 1980s.
Bubbles, they fret, are forming in property markets, inflationary pressure is building up and reforms needed to promote sustained growth (including measures to promote urbanisation) are not being carried out fast enough.
The currencies that are likely to benefit from that over the next few years are those which are growing relatively quickly and where monetary policy needs to tighten in light of increasing inflationary pressure.
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The only place where the Fed can locate a pulse of inflationary pressure is in wages and salaries for skills-based workers, particularly in technology.
There are, it is true, pockets of inflationary pressure (in property, for example) but the authorities can cope with a bit of this: the central bank has just increased the reserve requirements for banks to rein in their lending.
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After healthy growth is restored, gradual anti-inflationary pressure will be in order.
But such increases in spending power will also add to inflationary pressure.
He is, though, likely to hear from his hosts about the market's control over the price of the dollar, to which oil producers in the region peg their currencies, and whose 30% trade-weighted decline in the past five years is putting inflationary pressure on domestic economies.
That would reduce the inflationary pressure at home, resulting in lower interest rates and a cheaper exchange rate.
Rapid consumption growth in a fully stretched economy raises the risks of inflationary pressure yet further.
Just as troubling may have been the extraordinarily rapid recent growth in corporate profits, which can be evidence of inflationary pressure not picked up by the official price data.
By sucking in cheaper imports a strong dollar takes some of the inflationary pressure out of the American economy.
With little inflationary pressure, there is scope for further cuts in rates.
"Pricing pressures in the pipeline are up definitely there, and those are early signs of overall inflationary pressure, " says Wesbury.
Fed Chairman Ben Bernanke has come under increasing pressure to address inflationary concerns, as food and energy costs have gone up steadily in the U.S. (Read Firms Wave Red Flag Of Inflation).
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The economy's pace is producing clear inflationary pressure, with the core consumption deflator rising at an annualised 2.1% in the fourth quarter of 1999, the fastest for almost five years, and employment costs up by 3.4% in the year to the fourth quarter.
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