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Consumer prices in the U.S. fell more than forecast in October, which may reassure Federal Reserve policy makers who last month described inflation as a bigger worry than a slowing economy.
The consumer price index dropped 0.5 percent, matching September's retreat, the Labor Department said today in Washington. Excluding food and energy, prices rose 0.1 percent, the smallest increase in eight months. In a separate report, the Fed said industrial production rose 0.2 percent in October.
Traders and economists seized on today's figures as evidence the Fed won't need to raise interest rates and may even cut them. Less inflation gives Chairman Ben S. Bernanke and his team more room to stimulate the economy should the housing downturn threaten to end the five-year expansion.
The upward momentum in inflation has been broken, a senior economist said. The Fed has done its job.
Bonds rallied in the minutes after the report was released, before erasing their gains. Stocks advanced.
Economists expected the consumer price index to fall 0.3 percent, according to the median of 76 forecasts in a Bloomberg News survey. Industrial production had been projected to rise 0.3 percent after a 0.6 percent drop in the prior month.
`More Relaxed'
``We're in a soft-landing scenario, inflation is easing, and the Fed can have a more relaxed attitude about monetary policy,'' said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``The big question is when, and not if, the Fed will ease interest rates. That might be as early as March.''
Minutes of the Fed's October meeting released yesterday showed inflation as the biggest concern of officials. There was no discussion of a cut in borrowing costs, the records show, putting their stance at odds with some traders and economists who anticipate a reduction. |
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發表於 2006-11-17 01:45:08
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發表於 2006-11-17 02:09:03
