U.S. Vulnerable To Global Slowdown, Volatility:Fed’s Fischer

America Vulnerable www.purnartha.com

The U.S. economy could suffer, with inflation remaining too low, if recent volatility in financial markets persists and signals a slowdown in the global economy, the Federal Reserve’s second-in-command said on Monday. Fed Vice Chairman Stanley Fischer, however, warned about jumping to conclusions given that some past bouts of financial market turbulence have not harmed the world’s largest economy.Fischer said, oil price drops and the dollar’s rise suggested inflation “would likely remain low for somewhat longer than had been previously expected” before moving back to the Fed’s 2 percent target. Though he is more of a centrist at the Fed, Fischer gave two other hints on Monday that his thinking has shifted dovish: he said there is “some benefit to maintaining a larger balance sheet for a time” to support the economy. The central bank’s portfolio of bonds is worth about $4.5 trillion after years of post-crisis stimulus.

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