Volcker said he expects higher inflation in 1987.

Federal Reserve Chairman Paul A. Volcker said that the falling value of the dollar and the rebound in oil prices will cause consumer prices to rise between 3% and 4% this year, compared to an increase of a little more than 1% last year. He hinted that if such increases begin a longer-term trend upward, the Fed will be tempted to clamp down on the money supply to choke off inflation. Volcker's comments came in a speech in Los Angeles to several hundred business executives.

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