Saturday, September 19, 2009

Taylor: Rates May Rise Early in 2010

The Federal Reserve may hike up interest rates to combat inflation as early as the beginning of next year, says Stanford University Professor John Taylor.

Interest rates have hovered at a very low target range of zero to 0.25 percent since December, as monetary policymakers have worked to get the country out of the recession.

Lower lending rates can eventually lead to rising consumer prices.

The government, meanwhile, has earmarked $787 billion in stimulus spending programs that should inflate the country's budget deficit, which can also fuel inflation, Taylor told Bloomberg News.

The Congressional Budget Office predicts the budget deficit will widen to $1.6 trillion this year. (more)

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