Speaking at the annual convention of the Texas Cattle Feeders Association, Dallas Fed President Richard Fisher said the "mother of all financial storms" is causing a reversal in what was an inflationary trend earlier in 2008.
"As evidenced by the experience of the retailer I cited earlier, the impetus for rising prices came to a grinding halt as the credit crisis took grip and confidence evaporated," the central banker said.
Fisher explained that as the credit market froze, the inflationary momentum stopped in its tracks."As October approached, it became increasingly clear that smart businesswomen and -men no longer had the option of seeking to protect their top and bottom lines by seeking price increases for their goods and services."
Fisher went on to explain that the FOMC believes a 1.00% interest rate is the necessary remedy to help restore the economy and bring back confidence to the markets.
By Erik Kevin Franco and edited by Nancy Girgis
©CEP News Ltd. 2008