Inflation, Interest Rates Expected To Stay Low Into 2010

The Federal Reserve is playing a dangerous game. The dollar is record lows. Gold is at record highs. Oil is at $80 a barrel. The economy is underperforming and inflation remains low.

The Washington Post reports on this delicate dance by the highly regarded Ben Bernanke:

Chicago Federal Reserve President Charles Evans said on Friday that U.S. monetary policy was likely to remain accommodative well into next year, but that the tools for shifting gear were being explored.

With inflation "underrunning" and the economy underperforming, interest rates would remain low for an extended period of time as the U.S. Federal Reserve monitored developments, Evans told reporters.

But U.S. policy-makers were already exploring ways to eventually shift to more restrictive policy when the time was right, he said, adding that members of the U.S. central bank's Federal Open Market Committee still had different perspectives.