Photo: i am the sam via Flickr
Q4 GDP just came out and it was mediocre. That in itself might suggest more monetary easing is on the way.But the real reason to think that Bernanke might be inclined to pump again is the emerging disinflation.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.8 per cent in the fourth quarter, compared with an increase of 2.0 per cent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 1.0 per cent in the fourth quarter, compared with an increase of 1.8 per cent in the third.
Prices are still rising, but not by that much. Any hint of a return to deflation will spur the Fed to act.
Read more here.