The Federal Reserve is considering establishing a de facto inflation target, minutes of its groundbreaking December policy meeting revealed Tuesday. The idea would be to shore up public expectations of positive inflation and so make it less likely that a deflationary dynamic could take hold as the US recession deepens. The minutes also reveal that Fed economists now expect the US economy to contract in 2009 as a whole, with a sharp decline in the first half and a slow recovery in the second. For full Fed minutes, click here.

This entry was posted by Gwen Robinson on Wednesday, January 7th, 2009 at 5:38 and is filed under Capital markets. Tagged with federal reserve. Edit this entry.