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US staring at double-dip recession as calls for higher interest rates grow
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| Contributor | kal |
| Last Edited | kal Jun 02, 2008 06:18am |
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| Category | News |
| Media | Newspaper - Daily Telegraph |
| News Date | Monday, June 2, 2008 12:00:00 PM UTC0:0 |
| Description | By slashing interest rates in the face of rising price pressures, has the world's most important central bank sowed the seeds of a new inflationary era? It's an alarming idea, but one gaining currency all the time.
Since the sub-prime crisis broke last summer, America's Federal Reserve has dropped rates by 325 basis points - all the way down to 2 per cent. But looser money, along with sky-high oil and food prices, has cranked up US inflation, which now stands at 3.9 per cent.
In real terms, American borrowing costs are firmly in negative territory. No wonder the markets are wondering if Ben Bernanke, Fed chairman, has made a grave error.
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