Fed Governor Kevin Warsh on Commodity Prices, Pass-Through Risk and Future Policy (11/8/2010)

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I've been posting a lot about the Federal Reserve recently as quantitative easing II, combined with supply/demand issues around the world, spike commodities and Fed Chairman Ben Bernanke doesn't seem to think it will affect consumer prices (see Bernanke speak to students at Jacksonville University). However, Fed Governor Kevin Warsh addressed the concern in a WSJ op-ed.
"Lower risk-free rates and higher equity prices—if sustained—could strengthen household and business balance sheets, and raise confidence in the strength of the economy. But if the recent weakness in the dollar, run-up in commodity prices, and other forward-looking indicators are sustained and passed along into final prices, the Fed's price stability objective might no longer be a compelling policy rationale. In such a case—even with the unemployment rate still high—we would have cause to consider the path of policy. This is truer still if inflation expectations increase materially." [read full article at WSJ.com]
Hat tip Zero Hedge