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Fed Meeting Minutes: Growth A New Concern

The Federal Open Market Committee released the minutes from its Dec. 12 meeting this afternoon. The language sounds about the same as the last Fed check-in, that inflation is still a concern. But the report notes that several members of the FOMC are worried about economic growth. Erin Burnett hosted two top analysts on “Street Signs” to debate the issue – is inflation inevitable?

Carl Tannenbaum is the chief economist at LaSalle Bank. He agrees that the tone of the minutes and the Fed’s latest public statement show a continuing concern for inflation. He says the key is to watch how the plant and labor numbers affect the overall economy. Tannenbaum isn’t expecting any relief in the near future.

“I think the inflation issue is going to be on the table all of this year,” Tannenbaum says.

But Rajeez Dhawan doesn’t see anything worth worrying about. He’s the director of the economic forecasting center at Georgia State University. According to Dhawan, core inflation in July had a three-month annualized growth rate of 3.5%. It’s 2.2% now, and the inflation expectation is down 40 basis points since July as well. These are all signs that inflation is moderating, he says. Dhawan cautions that a continued housing slowdown could spill over to the consumer side – and that would have a negative impact on the economy.

“We need to be more cognizant of the fact that the economy can slow a little bit more further than we thought it might,” he says.