Svenja O’Donnell and Erik Schatzker
Friday, September 11, 2009
Sept. 11 (Bloomberg) — Stanford University professor John Taylor said the U.S. Federal Reserve may have to start raising interest rates at the start of 2010 to contain price pressures.
“If inflation starts to pick up” as the economy recovers, “the Fed’s going to have to raise rates as early as the first part of next year,” Taylor said in an interview on Bloomberg Television in New York today.
The Fed has kept its interest rate in a target range of zero to 0.25 percent since December in a bid to pull the economy out of a recession. The central bank has switched to asset purchases and credit programs as its main policy tools.
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Under Chairman Ben S. Bernanke, the Fed used emergency powers to rescue American International Group Inc., as well as markets for commercial paper, housing bonds and asset-backed securities. In the process, the Fed’s balance sheet expanded by $1.2 trillion over the past year.
Treasury Secretary Timothy Geithner said yesterday that the government is moving to withdraw some of its support for financial markets.
This article was posted: Friday, September 11, 2009 at 10:32 am