by Calculated Risk on 9/26/2006 01:40:00 AM

From Bloomberg: Volcker Sees Risks of U.S. Inflation Creep, Pressure on Fed

Paul Volcker ... said he's worried both about inflation and pressure on the U.S. central bank to not do anything about it.

"I am a little bit more worried about inflation," said Volcker, 79, speaking at a discussion sponsored by the Women's Economic Round Table in New York yesterday. Gerald Corrigan, who served as New York Fed president from 1985 to 1993, said he shared Volcker's concerns.

While the inflation rate isn't "high" or "running away," Volcker said, "it is kind of creeping up, and I am impressed by the degree of pressure, if that is the right word -- psychological pressure, political pressure -- there is not to do anything about it."

For those that want to see the entire panel dicussion (long):

Click image for video.

And this fits in with Dr. Tim Duy's Fed Watch tonight: Widening Disconnect

The countdown to the next FOMC meeting is underway, and the gap between market expectations and the Fedspeak appears to be widening. Quite honestly, I find such periods very, very uncomfortable, mostly because I feel Fed watching amounts to explaining a position taken by the Federal Reserve that the markets believe is increasingly untenable.