That’s the subtext behind comments from Minneapolis Fed President Stern’s comment that the Fed has the responsibility to withdraw excess liquidity, once appropriate, to avoid longer-term inflation.
The Fed (and its former chairman) is still battling the charge that it kept rates too low, too long in the early part of the decade. Deflation-phobe Ben Bernanke was the architect of the super-low 1% rates policy, so inflation hawks are rightly concerned that it will happen again. At the rate things are going, we should be so lucky…
