No safety net against rising prices
The Fed's move to lower the lending rate has critics worried about inflation. Doug Krizner talks to Adrian Ash of London gold-trading firm BullionVault, who says that prices are rising.
Euros and dollars (Bertrand Langlois, AFP/Getty Images)
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TEXT OF INTERVIEW
Doug Krizner: The Fed took an aggressive step in presenting a recession by slashing its key lending rate a half point. But critics are worried the move may accelerate inflation. The dollar fell to a new low against the euro, and gold price rallied to a 28-year high.
Let's bring in Adrian Ash, he is market commentator for the London-based gold-trading firm BullionVault. Adrian, how do you see things?
Adrian Ash: I think there's an awful lot of inflation building up in the pipeline up ahead. Crude oil prices gives a lie to that. I think wheat prices also -- I mean, wheat prices are at record highs now. Base metals are rising again. Official government currencies, not just the dollar, are not gonna provide much of a safety net against the rise in prices that we're gonna be seeing very soon.
Krizner: So with the people to whom you're speaking this morning, what is their reaction to the decision by the Fed yesterday? Is there a general sense in Europe that the U.S. is now reinflating another bubble?
Ash: I think that's what, I think that looks like the Fed's game plan. If you look at the reaction on the Dow Jones and the S&P yesterday, you know, huge jump. You know, equity investors are clearly very happy that the Federal Reserve seems determined to keep the money bubble running on. But if you look at what the bond market is saying, longer-dated U.S. Treasury bond debt, that is starting to fall. So longer-term interest rates are rising for the dollar right now. Even as the Fed is cutting at the front.
Krizner: Adrian Ash is market commentator for BullionVault in London. Adrian, thanks so much for talking with us.
Ash: Not at all. You're very welcome, Doug.
