US inflation is more critical than deflation?

The move of the US Federal Reserve to inject more money into the economy could give its effects and contribute to inflation but the growth still will remain moderate through the next year, predict the group of analysts. The National Association for Business Economics (NABE) reported that its 51 members ranked inflation as a bigger worry than deflation. The survey was conducted between October 21 and November 4.

Both home and abroad the Fed’s decision to buy more government bonds has been highly criticized. Meantime, nearly third of NABE panelists view the Fed's second asset purchasing program as somewhat lessening the risks of deflation, while another 33 percent saw the step as risking inflation.

The economists forecast the Fed's preferred measure of consumer inflation -- the personal consumption expenditures price index excluding food and energy -- to grow to 1.5% by the end of next year from a projected 1.0%. It is lower than the Fed's considered comfort zone between 1.7 percent and 2.0 percent.

NABE panelists tweaked the gross domestic product (GDP) growth forecast for 2010 and kept the estimate for 2011 unchanged at an annual rate of 2.6 percent.

The economy is now seen expanding at a 2.7 percent rate instead of 2.6 percent this year, still below the 3.5 percent many analysts say is needed to start lowering unemployment.