FINANCIAL TIMES: …Fed officials have always banked on soft inflation as a temporary phenomenon that will gradually revert towards normal levels. But the longer it continues, the more concerned they might become about the dangers of disinflation – a slowdown in price rises – or even a slide towards deflation.
“Inflation is the new risk for the Fed, of course – the lack of it, that is,” said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York.
“Today’s PPI report means we are not out of the woods yet on those disinflation worries. We hope this relative lack of inflation does not make the Fed delay a first cutback in its $85bn of monthly quantitative easing purchases at its September meeting.” … (more)
