HispanicBusiness

The debate continues on the timing and sequence to begin tightening monetary policy in the United States. Although several economic indicators provide margin for the central bank to keep interest rates low, in its own terms, "for an extended period."

For instance, the Federal Reserve forecasts that unemployment will remain between 9.5 and 9.7 percent, until the end of this year. The White House Economic Advisors are a bit less optimistic. They predict that this year's average unemployment will remain around 10 percent, decreasing to 9.2 percent in 2011 and to 8.2 percent in 2012.

Additionally, inflation remains subdued. Last week, the Labor Department revealed that, in January, consumer prices increased only 0.2 percent. But without energy and food, consumer prices decreased 0.1 percent, the first decrease registered in 28 years, since the recession of 1982.

The situation is such that some have proposed that central banks should tolerate a bit higher rates of inflation, for instance, of 4 percent, instead of the currently preferred 2 percent. This proposal resonated, because it was presented recently by MIT Professor Olivier Blanchard, presently Chief Economist of the International Monetary Fund, perhaps one of the best known anti-inflationary institutions. Also, the head of the Federal Reserve Bank of San Francisco, Janet Yellen in a recent speech, described current inflation as "undesirably low."

However, it should also be recalled that some attempts to manage inflation have led to spectacular rates of hyperinflation, as those experienced in Latin America during the eighties. For this reason, managing inflation has been compared to riding a tiger, because the tiger always ends up devouring the rider.

Isaac Cohen is the former director of the Washington Office of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). He is a commentator on economic and financial issues for CNN en Espanol TV and radio.