INFLATION

The Federal Reserve meets this week at a time when the U.S. economy has shown some signs of improvement, and the central bank is likely to restate its support for boosting the economy through both conventional and unorthodox means.

Deflation has arrived but inflation could be flaring up in a couple years. The latest March consumer price index showed the first decline over a 12 month period since the Eisenhower administration. With rising unemployment and excess factory capacity there is virtually no pressure for wages or prices to rise.

Top U.S. officials on Saturday offered reassurances that the worst of the economic downturn is likely over, helped by unprecedented efforts to keep credit flowing, though the recovery will be slow.

Top U.S. officials on Saturday offered reassurances that the worst of the economic downturn is likely over, helped by unprecedented efforts to keep credit flowing, though the recovery will be slow.

The Federal Reserve will not allow its unorthodox policies to trigger a surge in inflation, but may still need to do more to ease credit if the economy remains weak, the Fed's No. 2 official said on Saturday.

Prominent Wall Street economist, Henry Kaufman, said on Friday that the Federal Reserve allowed the global credit crisis to happen and must be redrawn as a tough regulator to stop big financial institutions from taking excessive risks.

China's economy slowed in the first quarter to its weakest pace on record, but an improvement in data for March offers tentative signs that the worst may be over for the world's third-largest economy.

U.S. consumer prices fell in March, posting their first 12-month drop in nearly 54 years, and industrial production slipped further, according to data on Wednesday that underscored the severity of the recession.

U.S. consumer prices fell in March, posting their first 12-month drop in nearly 54 years, and industrial production slipped further, according to data on Wednesday that underscored the severity of the recession.

Federal Reserve Chairman Ben Bernanke said Tuesday the latest figures on housing and consumer spending suggest a rapid contraction in the economy could be easing.

China's economy is showing some signs of improvement, but a big fall in wholesale prices in Japan suggested the world's second-largest economy was sliding back toward deflation.

The U.S. economy is set to emerge from recession in the second half of this year as consumer spending and the housing sector recover, but unemployment will rise well into 2010, according to a survey.

The United States economy will skid more deeply into recession in coming months, Federal Reserve policy-makers warned on Thursday, but it is time to start planning how to wind down spending to avert an inflationary surge.

The sense of freefall for the U.S. economy is likely to end in the middle of the year, though the road to recovery could take some time, Lawrence Summers, U.S. President Barack Obama's top White House economic policy aide, said on Thursday.

The U.S. recession is likely to grind on for some time, especially as strains in credit markets continue, a top Federal Reserve policy-maker said on Thursday.

The Bank of England left interest rates unchanged at a record low of 0.5 percent on Thursday, and said it would take another two months to complete its 75 billion pound quantitative easing program.

The recession chokehold that is gripping the world's richest nations won't loosen until late this year, and Reuters polls show the economic outlook has dimmed for 2009 despite a vigorous global stock market rally.

Author Kevin Phillips expects rising inflation, similar to the 1970s, as the economy recovers from the current recession.

The U.S. economy is grim, and the Federal Reserve is duty bound to apply every tool to clean up the financial system and clear a path for a return to sustainable growth, Richard Fisher, president of the Dallas Fed, said on Wednesday.

European Central Bank Executive Board member Juergen Stark on Tuesday criticized the decision made at the G20 summit to boost the IMF's Special Drawing Rights as ill thought through and potentially inflationary.

A quarter of the world's companies, and 40 percent in the United States, plan to freeze salaries this year, but employees in South America and India can look forward to robust rises, a global survey shows on Tuesday.