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Dollar Now : Fed Outlook & Research

“It wouldn’t go well with markets if the Fed tries to muscle through with a rate hike when inflation isn’t showing signs of picking up,” Costerg said. “Seeing a bottom in core inflation is important for the Fed. This is not going to happen until mid-2015.” Others say disinflationary pressures won’t keep the Fed from raising interest rates by mid-year.
“If the inflation numbers were going to be an impediment to the Fed pulling the trigger in June, they would have signaled it,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. Blackberry Display Picture, Find Here!
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"Dollar Now : Fed Outlook & Research"

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San Francisco Fed researchers Galina Hale and Bart Hobijn found in a 2011 paper that imports account for 13.9 percent of U.S. consumer spending on goods and services. A 1 percent drop in the price of foreign-made clothing, for instance, would reduce its cost on store shelves by 0.4 percent, according to Mericle and Mischaikow at Goldman. Similarly, American consumers would pay 0.2 percent less for new automobiles. At their last meeting in January, policy makers said that while price increases will probably decelerate in coming months, “the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate.”







The disinflation stemming from goods made overseas may mean it takes longer for that to happen. The Labor Department’s consumer price index showed apparel prices declined an annualized 6.9 percent from October through December, matching the biggest decrease since 1952. The overall CPI fell 0.1 percent in the 12 months through January, the first year-to-year drop since October 2009, when the economy was emerging from a recession.
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