Should the Fed cut rates and give the economy a boost -- or stay on inflation watch? Today on “Power Lunch,” Alan Blinder, professor of economics at Princeton University and former Federal Reserve vice chairman, and Andy Brenner, senior vice president of Man Securities, joined Bill Griffeth to debate how the Fed is going to handle slowing economic growth with inflation concerns.
According to Blinder, balancing inflation and growth is a routine problem for the Federal Reserve. He believes that the Fed is content where those are, and will continue to watch developments closely. “If inflation comes below 2%, the Fed will cut rates,” said Blinder.
“The Fed is stuck between a rock and a hard place,” said Brenner. “The subprime fallout and the weak housing market are weighing on the Fed.” Brenner also pointed out that the recent Producer Price Index and Consumer Price Index numbers show inflation in the system: The CPI increased 0.4% in February, after a 0.2% rise in January.