Fed worried about deflation

WASHINGTON (MarketWatch) — Federal Reserve policymakers on Tuesday said they were worried about deflation and were prepared to ease monetary policy if necessary to ward off the danger. In a statement, Fed officials said inflation is below levels consistent with price stability. “The FOMC will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and return inflation, over time, to levels consistent with its mandate.” The Fed kept its benchmark interest rate at a record low level between 0-0.25% for the 20th consecutive month. The central bank made no change to the key pledge to keep rates “exceptionally low” for an “extended period.” Thomas Hoenig, the president of the Kansas City Federal Reserve Bank, dissented for the sixth straight meeting in favor of getting rid of an “extended period.”

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