In a survey conducted recently, many economists said that they approve of the current course taken by the Federal Reserve on the monetary policy and see the deflation as a risk in the shorter term. The National Association for Business Economics spoke on Monday about 60% of 242 members who were surveyed from July 30th and August 10th who said that the monetary policy was suiting the conditions that the economy faces currently. The benchmark overnight interest rates were kept by the Fed steady between 0 and 0.25 percent point range at its last meeting to choose policies, held on August 10th. It also renewed a pledge to keep the interest rates low for an extended period.

45% of the surveyed members believed that in the near term, the monetary policy risks were now tilted towards deflation or decline in the prices. But this policy is also tilted towards inflation in the longer term. The Fed is seeking to keep ample liquidity in the financial system in its bid to spur lending. Some analysts believe that it is difficult to remove liquidity fast enough in the future to ward of inflationary price spiral risk.

Other matters have seen considerable skepticism from the economists. 89% of the economists surveyed thought that the sweeping overhaul of the financial regulatory system would only have a moderate effect to prevent another crisis. Only 3% said that it would significantly cut the risk in the future. The economists also didn’t agree with letting of the tax cuts put in place by Bush administration in 2009 to expire on schedule. 81% think that the bipartisan National Commission on Fiscal Responsibility and reform will not produce a creditable plan that is capable of getting more support from the congress.