1. Inflation Watch Inflation (price change) is important for REALTORS® because changes in prices in the economy can lead to shifts in interest rate policy by the Federal Reserve Bank. During the recent financial crisis, fears of deflation were present in news reports (deflation can lead downward spiral of prices that destroy an economy similar to what happened in the Great Depression) The deflation talk has quieted, but inflation has become a growing concern. Some that stagflation will take hold with the current weakness in the job market (high unemployment and high inflation). This situation can be very difficult for the Fed to combat inflation due fear of further job market deterioration.

2. Inflation Watch February 2011 Producer prices showing signs of inflation, consumer prices are more tame, but higher than expected Underlying inflationary pressures seen in commodity prices Oil / energy prices are increasing Gold, other metals and commodities prices high Dollar is weak, however some are forecasting it to rise this year. A weaker dollar makes imported goods more expensive and adds to inflationary pressure