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> Economists React: Deflation Threat Is ‘Real’January 16, 2009, 10:45 am The headlines are breathtaking, The nonappearance of a negative year-to-year headline rate only delays the inevitable; it will nudge up in January but by March we expect -1.0% or so, and -3% by June… Unlike in 2003, the deflation threat this time is real. –Ian Shepherdson, High Frequency Economics A global economic contraction has removed the threat of inflation, at least for the time being. The immediate issue is whether what has developed into a disinflationary environment will give way to a broad-based and persistent deflation, which we do not expect to be the case. Still, this is a scenario that cannot be totally dismissed, and until this risk has safely passed, worrying about the long-term inflation implications of the aggressive actions of the Federal Reserve to unclog the credit markets and stimulate the economy seems a luxury. There will come a time when such questions will merit serious consideration, but just not yet. –Richard F. Moody, Mission Residential © Mission Residential. All rights reserved.
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