Does the English-Fedspeak Fedspeak-English Dictionary include an entry for deflation? Consider the Fed’s pronouncement yesterday about the current state of the economy: “The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation from its already low level. On balance, the committee believes that the latter concern is likely to predominate for the foreseeable future.”
Many, like Floyd Norris in today’s New York Times, consider the Fed’s jargon “Delphic.” And indeed, the Fed believes there is power in indirect statements. Nonetheless, doesn’t there come a time when Delphic statements morph into patronizing ones? Isn’t calling deflation “an unwelcome substantial fall in inflation” the monetary equivalent of politicians calling tax increases “contributions”?
