Sung Sohn
Sung Sohn
Sung Won Sohnis a Korean American economist, noted for his skill in economic forecasting. He is currently the Martin V. Smith Professor of Economics at California State University, Channel Islands...
economy ensure fed fuel inflation left measures preventive taking
There's so much liquidity in the economy right now that, left alone, it could become fuel for inflation, ... I can see the Fed taking preventive measures to ensure inflation doesn't become a problem.
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If they keep the word, the financial markets will like that, because the Fed has put itself in a self-imposed box. If they discard the word measured, they'll be saying they're free to do what they want.
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There is no reason for the Fed to deviate away from the cautious policy approach, ... The central bank won't raise the interest rate until August or later.
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It's quite possible the Fed will have to turn around and raise rates.
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Dollar depreciation is good assuming it is taking place in an orderly manner. The concern is any precipitous plunge. If that were to happen the Fed would have to raise rates significantly.
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The pause in economic growth and the drop in confidence will probably cause the Fed to tighten later rather than sooner. The earliest I can see them tightening is the end of June, and they could quite possibly wait until August.
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This economic indicator continues the string of statistical signs supporting the current Federal Reserve stance, ... The recovery seems to continue, but it is still too weak to generate sufficient payroll growth for inflationary pressure.
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I think the Fed is pretty much done for this economic cycle, unless some major catastrophe develops, such as a messy war in the Middle East or a housing bubble bursting.
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By the time the election is over, the Fed might be in a position to increase rates more aggressively. In 2005, we might see rates going up more than a quarter (percentage point) every other month.
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Once the Fed starts raising rates, I suspect they might go up more rapidly than a lot of people realize. Many of us think the Fed will do things slowly and gradually. In fact, they usually do things pretty quickly.
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Hopefully, by August (when the Fed next meets), we should have a pretty good idea that the economy is expanding. A tax rebate and earlier cuts will be working. If the Fed cuts in August, we will worry more about them overdoing it.
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The jobless rate is the best indicator of monetary policy, ... The Fed keeps cutting rates as long as the jobless rate goes up. This time around is really no exception.
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Inflation is not an issue right now. However, it could be in the future. The Fed will begin to worry about inflation because monetary policy affects the inflation rate with a lag of as much as 18 months to two years, so they need to worry about it now.
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Crowding out could become a distinct possibility in the future, pushing up interest rates significantly in 2005 and beyond,