Skip navigation
Watchlist Sponsored By :


Current DateTime: 07:48:34 24 Nov 2009
LinksList Documentid: 24355697
  • Runway Angels

      The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.

  • Smartphone Guide

      Here's a need-to-know guide to nine devices, based on features, price, network and platform.

  • Wines for the Holidays

      Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES


Current DateTime: 07:48:34 24 Nov 2009
LinksList Documentid: 33793611
  • A Healthier & Wealthier You

      Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.

  • The Billionaire BFF's

      Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

  • The Many Myths of Coca-Cola

      Can you tell which statements are true, and which ones are just rumors?


Current DateTime: 07:48:35 24 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Fed's Mishkin Says Inflation Is Low Thanks to Policy
By: Reuters | 28 Sep 2007 | 04:01 AM ET
Text Size

Tight central bank monetary policies and well-grounded expectations of low inflation are to thank for low inflation in recent years, not globalization, Federal Reserve Governor Frederic Mishkin said on Thursday.

Frederic Mishkin
Federal Reserve Governor Frederic Mishkin

"Inflation has come down in the old-fashioned way ... Tighter monetary policy and a commitment to price stability by central banks throughout the world have led to lower inflation and an anchoring of inflation expectations," Mishkin said at a conference on globalization hosted by the Fed.

Mishkin said that on balance, the net effect on U.S. inflation from cheaper manufactured imports and higher commodity prices has been small in either direction.

"Many of the exaggerated claims that globalization has been an important factor in lowering inflation in recent years just do not hold up," he said.

Discussing the effects of globalization on economic growth, Mishkin said global factors have the potential to be stabilizing for individual economies. Meanwhile, globalization has been a key factor in promoting economic growth, he said.

Globalization may have helped desensitize inflation to the gap between an economy's economic speed limit and its actual rate of growth -- known as the output gap, Mishkin said. Global factors may mean an economy is less likely to develop bottlenecks as domestic labor markets tighten, he said.

There is some evidence to suggest that foreign factors influence interest rates, Mishkin said. For example, a global savings excess has somewhat lowered long-term interest rates by reducing the risks associated with holding longer-dated debt, he said.

"However, central banks still retain the ability to control short-term interest rates, which affect the domestic cost of credit and long-term interest rates, and so can continue to do their job of stabilizing inflation and output," he said.

Mishkin said globalization may have increased the role of exchange rates as a factor affecting inflation and growth.

The larger the share of imports in the economy, the bigger would be the effect on growth of a change in net exports, he said. Also, the more a country imports, the greater the effect on inflation from a change in import prices resulting from a move in exchange rates.

As the value of the U.S. dollar changes, Europe's economy will have to adapt with shifts from one sector to another, Mishkin said.

"Exchange rates move for reasons we don't always understand and can have an effect on the economy," he said in response to questions after a speech on globalization.

"You want to have an economy that's pretty flexible, that can move resources from one sector," he added.

The U.S. economy has been flexible in response to foreign exchange fluctuations, and the European economy is faced with a similar need for adaptability, he said.

Increased integration of global markets could change the way an economy works and complicate the jobs of monetary policy makers, Mishkin said.

"In practice, however, the behavior of the U.S. and global economies does not appear to have radically changed in recent years," he said. "The Federal Reserve and other central banks retain the ability to stabilize prices and output."

Copyright 2009 Reuters. Click for restrictions.
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Remember when auto shows were major events where new models could generate buzz?
  • Swine Flu Needle
  • CNBC’s Mike Huckman visits a cutting-edge plant to see how the flu vaccine of the future is being made.
  • People who bottle up their anger at work are up to five times more likely to suffer a heart attack, a study found.
  • Playboy Logo
  • Playboy will outsource its publishing operations in a bid to become profitable again.
  • A new McDonald's in Manhattan is the nation's first to sport a sleek, chic interior imported from stores in London and Paris.
  • For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
ADD COMMENTS
Remaining characters


Current DateTime: 03:14:50 24 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 12:00:48 24 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 04:59:27 24 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 12:00:49 24 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters