Financial Times FT.com

Deflation risk boosts inflation target case

By Krishna Guha in Washington

Published: November 4 2008 20:22 | Last updated: November 4 2008 20:22

The risk of deflation could lead Ben Bernanke to approach the new administration and Congress next year about adopting an ­inflation target at the Federal Reserve, some experts believe.

The Fed chairman thinks it is unlikely the US will actually experience deflation – he judges that the starting level of inflation is too high, expectations too well grounded and the policy response to the financial ­crisis too vigorous for that to happen.

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