THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, October 30, 1996 TAG: 9610300427
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: 32 lines
The president of the Federal Reserve Bank of Richmond said Tuesday inflation remains too high, even if economic growth is cooling off.
``What worries me is some people have reached the conclusion that inflation is not a serious risk,'' Alfred Broaddus told a group of business economists in Richmond. ``I'm not convinced of this. I think we need to remain vigilant, and we will.''
He said the Fed should try to reduce inflation from its current level of around 3 percent. He said 2 percent is a more reasonable target than completely eliminating price increases.
The idea is to ``reduce the inflation rate to a point where it's no longer a significant factor in the economy,'' Broaddus said.
The Fed, through influencing interest rates and the availability of money and credit, seeks to stimulate sustained economic growth without rekindling higher inflation. Financial markets have been worried that stronger growth early this year would encourage the Fed to push interest rates higher to hold down inflation.
A report on the economy's performance is scheduled to be released today. While Broaddus didn't predict a growth rate for the gross domestic product, he said the figures will show a ``significant deceleration'' to ``a more sustainable pace.''
But he added, ``The latest evidence is that the economy is operating at a very high level of activity.'' by CNB