April 11, 2007	Wednesday	Rabi-ul-Awwal 22, 1428

BRIDGEWATER (Va.), April 10: US inflation is undesirably high but the Federal Reserve has anchored inflation with actions that have kept price rises low and stable, Fed Governor Frederic Mishkin said on Tuesday.

“The current rate of inflation is certainly higher than I would like to see. The view is that there is a likelihood, in fact, that we will have moderation in inflation,” Mishkin said in response to questions after speaking to students at Bridgewater College.

“But on the other hand, a key issue is, in fact, if we don't see that happening, that would be of great concern and as a result, we would then have to do something about it,” he added.

The Fed has held benchmark borrowing costs steady at 5.25 per cent since June after 17 consecutive quarter percentage-point rises. Fed officials have stressed that core inflation, which has edged up to an annual rate of 2.4 per cent according to a personal spending index favoured by the central bank, remains higher than they want but should moderate in a sluggish economy.

Mishkin said the Fed's success, through policy actions and statements, in holding inflation at around 2 per cent for the last decade has solidified confidence in the Fed's commitment to stable prices.

“In recent years, the Federal Reserve has been quite successful in maintaining a nominal anchor,” Mishkin said.

“Not only has the inflation rate remained within a reasonably narrow range, but inflation expectations, as measured by the spreads between inflation-indexed and non-inflation-indexed Treasury securities and by surveys of professional forecasters and the general public, have also been well anchored,” he said.

—Reuters