A Tiny Matter

[Annie]

http://news.yahoo.com/news?tmpl=sto...afp/useconomybankrates_050322214945&printer=1

Inflation shines bright on Fed radar

2 hours, 50 minutes ago


WASHINGTON (AFP) - The Federal Reserve (news - web sites) sounded the alarm over inflation with rising oil prices hitting US consumers where it hurts them most -- at petrol pumps.

For the first time in years, the US central bank signalled at the latest meeting of its policy-making forum that price pressures were becoming a pressing concern.


The Federal Open Market Committee (news - web sites) acted as expected in increasing the headline federal funds rate by 25 basis points for the seventh time in as many meetings to 2.75 percent.


But with higher oil prices feeding into record-breaking petrol pump prices in a nation of car drivers, the Fed revealed some anxiety about the impact on consumer inflation further down the line.


The FOMC stuck to its balanced line that monetary policy will remain "accommodative" and that rate hikes will be "measured". But analysts said it had opened the door to more aggressive action in the months ahead.


"Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident," the FOMC said.


IXIS CIB US economist Marie-Pierre Ripert said: "The Fed's assessment on the real economy has not changed significantly but the comments regarding inflation are much more hawkish.