Bloomberg News
MINNEAPOLIS - The longest U.S. economic expansion shows no sign of ending, and the risk of faster inflation is waning, Minneapolis Federal Reserve Bank President Gary Stern said in an interview Monday.
"The outlook is good in the sense that we will have further economic growth," Mr. Stern said. "We will not have, in my view, an appreciable acceleration of inflation from here."
Mr. Stern's comments suggested that he sees little reason to change the Federal Reserve's benchmark interest rate from 6.5%. Treasury securities rebounded from losses Wednesday on speculation that an almost evenly divided Congress would limit the next president's ability to seek measures that could fuel inflationary economic growth.
A government report released Wednesday showed that prices of imports, including oil, computers, and semiconductors, declined in October for the first time in six months. Import prices fell 0.5% last month after a 1.2% increase in September.
Also, the Commerce Department said Wednesday that stockpiles at U.S. wholesalers rose in September at the slowest rate in almost a year and a half and sales grew more than expected. Wholesale inventories rose 0.2% after rising 0.6% in August. Sales increased 0.7% in September after rising 0.2% in August.
Mr. Stern's remarks echoed those of other Fed policymakers who in recent speeches and interviews have indicated that inflation risk has diminished and that higher energy and labor costs have not made it impossible to achieve low and stable prices. Mr. Stern is a nonvoting member of the Fed's policymaking Open Market Committee, which meets next Wednesday.
Inflation hasn't "gotten out of hand," Fed Vice Chairman Roger Ferguson said two weeks ago. Philadelphia Fed President Anthony Santomero said in mid-October that "prices are going up but they're not being passed on."
"We're closer to what would probably be a sustainable path than we were certainly some months ago," said Atlanta Fed President Jack Guynn in October.
And Richmond Fed President Al Broaddus said Tuesday that the latest data on the economy give him "a greater degree of comfort."
The latest report on gross domestic product, showing a gain of 2.7% at an annual rate in the third quarter - less than half the prior quarter's growth rate of 5.6% - shows the economy "on a path of more moderate growth, which seems to be satisfactory," Mr. Stern said.
So far, officials at the Fed have given little reason for investors to expect its next move will be to cut rates.
The Federal Open Market Committee has issued an inflation warning after each of its last six meetings.
