Dallas Federal Reserve President Richard Fisher (voter) speaking at the Hilton Midland Plaza in Texas said that the current economic slowdown will be prolonged, but not very deep.
Fisher warned that the Federal Reserve is in a difficult situation trying to repair the financial system, and that inflation may even be higher when the economy emerges from the slowdown. He added that the inflation in emerging markets would also impact the U.S. economy.
Fisher referred to globalization as the cause for a "tectonic shift" in worldwide demand, and added that global food and energy pressures would continue unless growth in the economy slows. He also found it difficult to judge what the impact of speculators was on oil prices.
Fisher told the crowd that the ECB and Fed are working together to restore long term confidence and that the U.S. dollar would return to "strong, non-inflationary growth."
He also said that government needed to address the issue of medicare and social security.
By Steve Stecyk and edited by Cristina Markham