All Eyes on the Inflation-Wary Fed for Hint on Policy

Top U.S. Federal Reserve policymakers launch a speaking blitz this week that will be closely scrutinized for any hints the current bout of economic queasiness could prompt a future policy shift. Persistently high oil prices, already identified as a threat by the inflation-wary Fed, are seen by some analysts as a special red flag for Federal Reserve Chairman Alan Greenspan and other central bankers who worry about keeping intact the current “virtuous cycle” of steady growth and low inflation. Continuing violence in the Middle East kept oil prices near $35 a barrel Friday, far above levels that industrial countries have indicated they were comfortable with, though stock markets rebounded smartly from a tumble a day earlier. Greenspan speaks today to a financial markets conference in Georgia, and again Thursday in Washington before a monetary conference sponsored by the Cato Institute. At the conclusion of its Oct. 3 policymaking meeting, the central bank said energy prices were so far having only a “limited effect” on prices but said risks remained weighted toward rising inflation. On Thursday, Fed Gov. Laurence Meyer is scheduled to deliver his quarterly economic outlook speech to a Washington University audience in St. Louis. Meyer is known as an inflation hawk, but analysts say there are still reasons the central bank might want to drop its stance that risks are weighted toward inflation.