Fed's Ferguson: Deflation Risk Low

Newman, Emily
June 2003
Bond Buyer;6/12/2003, Vol. 344 Issue 31655, p2
Trade Publication
The risk that the United States will experience a deflationary spiral similar to Japan's is minimal. A deflationary slump is frequently more dangerous than inflation or even a typical economic downturn because it limits the United States Federal Reserve Board's ability to control the economy with interest rate cuts. The U.S. real economy is stronger than Japan's during a comparable period and asserted the U.S. is better equipped to deal with deflation and has significant economic tools at its disposal. Those tools include lowering interest rates further out along the maturity spectrum.


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