Cap'n Greenspan Can Take the Summer Off

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"The Fed can take the rest of the summer off," says TIME senior economics reporter Bernard Baumohl, after Thursday’s CPI number confirmed the good news: Inflation is definitely back in the grave. The overall Consumer Price Index was unchanged last month, and the core rate — which excluded volatile energy prices –- increased a mere 0.1 percent. Both numbers came in under expectations, yet another assurance that the Fed has absolutely no need to throttle back on the money supply when it meets in August. "In fact, it doesn’t even need to meet," jokes Baumohl. "They don’t even have to talk on the phone. There’s absolutely no sign of inflation, and that last quarter-point hike sent just the right message."

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Privately, Alan Greenspan can crow a little. With one eye on the so-called "new paradigm," in which tech-driven productivity gains naturally outstrip price pressures, and the other eye on a shaky Latin America, the Fed chairman isn’t anxious to raise rates. But some of his FOMC colleagues at that big mahogany table have been getting antsy about the Fed’s turning into a paper tiger, kowtowing to the stock market and letting the economy run wild and free. This week’s numbers give Greenspan a perfect reason not to listen. "There’s just no justification for a hike right now," says Baumohl, and plenty of reasons for maintaining the status quo — mainly that a tightening in the U.S. could make things difficult for neighbors to the south. "The Asian crisis may be over," he says, "but the Latin American one isn’t. Greenspan doesn’t want it erupting and hurting the U.S." Funny thing — those same fears, plus some standard nail-biting over earnings reports, are muting what might have been a big inflation celebration on Wall Street. Which makes Greenspan’s laissez-faire that much easier to defend.