Economist: Fed’s Easing Will Likely Lead to Inflation

It’s unlikely the Federal Reserve will be able to pull off a graceful ending to quantitative easing, economist Bob Brusca told CNBC. Instead, he thinks the central bank will probably allow inflation to creep up—not believing it is real—until it is too late.

“They think there’s a lot of slack, and therefore when bad things happen they don’t believe it. And that’s the problem: When bad things happen you have to believe it,” said Brusca, chief economist at Fact and Opinion Economics.  The central bank is grappling with several issues, he added.

“The Fed’s balance sheet is huge. I think they kept interest rates very low for a very long period of time,” Brusca said in an interview with “Power Lunch.” The central bank is also juggling “too many things” and is dealing with a division among its members.  “A division is also going to make it harder to do the right thing in a timely fashion.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.