Fed’s Stern: Healthy growth a year away; plenty of time to drain

Minneapolis Fed president Stern says he sees the recession persisting several more months but sees health growth by the middle of next year. This will give the Fed ample time to drain liquidity before inflation is stoked, he says. He says in the future the Fed must work proactively to prick asset bubbles.

Most elements of the reflation trade are firming, supported by oil’s return to the $60 area and a moves toward session highs in US equities. EUR/US trades at 1.3630 and Cable at 1.5500.

Slightly less upbeat is news that the median home price in Southern California fell 35.8% in April from a year ago, according to Dataquick.