Inflation Rate

Federal Reserve policymakers left interest rates unchanged yesterday, as was widely expected, but left open the possibility for later rate increases should inflation arise. However, most analysts believe the Fed will not boost rates again until after the November presidential election, if at all. "I think this is a calculated move by the Federal Reserve, leaving the door open for future rate increases," said Pradeep Ganguly, director of research and chief economist for the Maryland Department of Business and Economic Development.

NATIONAL Democrats reject offer on DeLay The Republican chairman of the House ethics committee offered yesterday to begin an investigation of Majority Leader Tom DeLay to end a stalemate that has kept the panel from functioning this year. Senior committee member Democrat Alan B. Mollohan of West Virginia quickly rejected the offer. [Page 3a] Moussaoui to plead guilty Zacarias Moussaoui, the only person indicted in the United States in connection with the Sept. 11 terrorist attacks, plans to plead guilty to charges that could bring the death penalty, two federal officials said yesterday.

Last month, an economist in this column was quoted as saying that most retirees should have a significant portion of their portfolio in TIPS. Since then, readers have called and written to find out more, and where to buy them. There's a lot to like about TIPS, or Treasury Inflation-Protected Securities. They're issued by the government, so there's no credit risk. They pay out interest twice a year. And, best of all, they adjust your principal periodically to keep pace with inflation. Inflation isn't the top worry for Federal Reserve policymakers now, but it's a concern for retirees.

Caught between inflationary pressures and a weakening economy, the Federal Reserve's policymakers voted yesterday to deal primarily with the weakening economy by keeping interest rates at their present level. The decision to hold at 2 percent the key short-term federal funds rate - which affects what consumers pay for mortgages, car loans and other credit - brought to a halt a stream of rate cuts since August, reductions that brought the fed funds rate to its lowest level since November 2004.

WASHINGTON - The job of the Federal Reserve and government policymakers got considerably more complicated yesterday when the Labor Department reported that consumer inflation is running at an annual rate of 5.6 percent, its highest level in 17 years. The Federal Reserve has been worried about inflation, or the rise in prices across the economy, for months. But it has left its benchmark federal funds rate at 2.0 percent since April, betting that the inflation pressures will ease when energy prices fall back.

Kevin MacKenzie of Perry Hall says (politely!) that I'm full of garbage, and of course he's right. Last Sunday's column on the continuing drop in the "core" inflation rate, he suggests, was based on academic nonsense that bears no relation to his life or any other aspect of reality. (Again, I'm paraphrasing. Mr. MacKenzie's language was far more cordial. Take note, e-mail ranters.) The column noted that consumer prices besides food and energy have barely budged since last year, which might signal a supply/demand imbalance and a weak economy blah, blah, boolah.

IF YOU like a lot of froth with your real estate, you will enjoy the federal government's latest numbers on appreciation in home values. If you've been expecting the boom to fizzle any day and are convinced that double-digit appreciation rates can't continue, you need to push back your bubble-bust timeline. That's the upshot of the latest quarterly data on 265 major real estate markets compiled by the Office of Federal Housing Enterprise Oversight, which tracks home pricing changes nationwide.

Hard workerIn reply to Howard H. Green's letter (Forum, Oct. 10):If Mr. Green would have taken the time to get his facts straight, he would have known I was not hired on as a superintendent. I started on the bottom rung of the proverbial ladder, worked very hard, put in many hours without pay and worked out of title without receiving the correct pay scale. Incidentally, this scale was considerably higher than the meager wage I was collecting.Furthermore, I resent being labeled a "one-legged mobster" or any other pseudo-descriptive derogatory name you may dream up to feed your inflated ego.Dominic J. CarozzaBaltimoreTax cap would cripple county school systemAs a homeowner in Baltimore County, I can certainly sympathize with those who are concerned about rising property taxes.

An unexpected surge in wholesale prices last month, the latest in a string of higher price reports, left many economists and investors wondering whether the inflation genie was starting to slip out of the bottle.Producer prices leaped 0.6 percent in April, the Labor Department reported yesterday. That jump -- the biggest in 2 1/2 years and significantly larger than most forecasters had expected -- unsettled everyone from bond investors to homeowners who hadn't gotten around to refinancing their mortgages and worry that an uptick in inflation could push interest rates higher.

WASHINGTON -- There is a central underlying problem with the economy at the moment: too many workers chasing too few jobs.The economy is expanding too weakly to absorb the new entrants to the labor force, 700,000 in the past two months alone. And employers are relying on overtime rather than hiring to meet what anemic consumer demand there is. Job creation actually went into reverse in June for the first time in five months, pushing the unemployment rate to 7.8 percent, its highest level in eight years.