The risk of deflation was overblown, says Richmond Fed chief Lacker. The Fed must no wait long or move too slowly to prevent inflation. The challenge for the Fed is to tighten soon enough to prevent inflation.
The pace of economic decline is slowing and growth will resume later this year, Lacker says.
Lacker, Fisher, Lockhart and Plosser, the hawkish wing of the Fed, have been quite vocal of late on the need to avoid a repeat of the “too low/too long” monetary policy of the early part of the decade. Tjis is helping boost the dollar, sending EUR/USD toward support at 1.4000. We trade now at 1.4010.
