The next one from the Fedsystem's front bench is non-voting Fed Kansas City president Thomas Hoenig who stated in his speech (pdf) from late Wednesday, "The primary concern for the outlook is that higher costs may lead to greater inflation pressures."
"let me provide a brief summary of my view of the US economic outlook and monetary policy. The overall outlook ... for the remainder of this year and 2006 is good. Considerable time will be required for the recovery from hurricanes Katrina and Rita, but I currently expect that the storms' impact on economic growth will be limited.I begin to repeat myself pointing out that inflation, unemployment and the multiple deficits will be the next market-shaking new. Who knows which will hit first?
In the next six months, I expect growth will be somewhat slower due to the disruption of business activity. In 2006, the rebuilding efforts in the affected Guld regions could add overall stimulus to growth. I believe that the greatest concern for the outlook is the potential for inflationary pressures to emerge. Currently, these pressures appear to be modest, but they will need to be carefully monitored going forward."