Business Times - 04 Mar 2008 Stagflation threat looms over inflation hawks Fed more fearful of fallout from housing crisis and its unknown backlash By LEON HADAR WASHINGTON CORRESPONDENT When the second most senior man at the US Federal Reserve acknowledges that the rising cost of energy, food and imports are spilling over into the core inflation rate, even inflation doves get worried. Indeed, when Fed vice-chairman Donald Kohn expressed concern early last week that the 'higher costs of energy, a pickup in the prices of imported goods (as the dollar declines), and perhaps, the persistent upward price pressures in commodity markets may be passing through a bit to core consumer prices', some Fed watchers began speculating that the US central bank would be forced to take a break from its interest-rate cutting drive aimed at containing the threat of economic recession. While, an annual rise of 2.5 percent in the 'core' consumer price index may not look like a danger to the ...
