Inflation Has Slowed – Interest Rates Unlikely To Increase At September 20th Federal Reserve Meeting

Inflation Has Slowed – Interest Rates Unlikely To Increase At September 20th Federal Reserve Meeting

Secretary of Labor
Elaine L. Chao

Although the Federal Reserve Chairman, Ben Bernanke, has said that there is a danger of inflationary pressures recently, there is some good news for the economy concerning inflation, which is also good news for stock market investors. The Core Consumer Price Index (CPI or inflation rate) stripped of food and energy rose just 0.2% last month, which is down from 0.4% in July.

The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The Index is calculated using the prices of 80,000 items including cigarettes, gasoline, auto insurance, breakfast cereal, college tuition, postage, appliances and government user fees. The CPI excludes taxes, stocks, life insurance and real estate.

Government officials from the U.S. Department of Labor, Bureau of Statistics either visits or calls on thousands of sales establishments to collect the data. The Bureau takes the data and measures the change. This percentage is the CPI.

The Fed is unlikely to change interest rates this month at its September 20th meeting. Short-term interest rate futures were unchanged on Friday. Chances of the Federal Reserve raising interest rates by 25 basis points have been at minimal levels recently and traded at zero percent after this new data.

Former Federal Reserve Chairman, Alan Greenspan, believed that inflation was a direct result of the national debt. Of course there are other factors involved, but this fits in with what has occurred the past few years.

By Dan Wilson
Best Syndication Writer



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