Analyst Says Fed Pouring Fire on Inflation Embers

The Federal Reserve is “pouring fire” on the “glowing embers of inflation” as it expands its balance sheet while tapering its bond-buying stimulus, Jim Grant, founder and editor of Grant’s Interest Rate Observer, told CNBC Tuesday.
In an interview with “Closing Bell,” Grant said the Fed’s monetary policy has led to an inflation of asset values, will likely lead to a measured rate of consumer price inflation and will certainly lead to “financial turmoil.” If that turmoil is severe enough, he thinks it could introduce another risk of deflation.

“Deflation is a monetary event such that prices collapse, not because productivity is higher but because everyone has to sell and that is part and parcel of a financial accident,” he said. “The Fed is going to give us a financial accident.”
The Federal Reserve began its two-day meeting Tuesday. It is expected to continue cutting back its stimulus by $10 billion per month.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza