Remember: Only the rest of the world has inflation, not America

The Federal Reserve has decided to lower interest rates in the past two weeks in order to pump liquidity into the system because the banks “miscalculated” the risk in their mortgage holdings.

The government has repeatedly said that they are watching inflation but that it does not pose an imminent threat.

It’s funny that it seems to be threatening just about every other nation and, oh yes, a lot of companies too.

South Africa’s Federal Reserve is meeting this week to decide its interest rate policy. They will likely keep rates as they are because:

The Reserve Bank has lifted its key repo rate by 400 basis points since June 2006 to 11 percent as it fights to bring down targeted CPIX consumer inflation, which jumped to 8.6 percent in December, breaching the upper end of a 3-6 percent band for the ninth straight month.

Poland actually had the guts to raise their rates this week:

Poland’s Monetary Policy Council (MPC) raised interest rates on Wednesday as expected to try to curb rising inflation despite signs of a slowing economy and is likely to further tighten monetary policy ahead.

The MPC raised the central bank’s main rate by 25 basis points to 5.25 percent and said in a statement it saw inflation above 3.5 percent in the near term with risks to further acceleration of wage growth.

Of course, Poland is also seeing growth rates around 6.5% which might have something to do with their inflationary biases.

Then there is Chile. Their inflation rate surged to 7.8% in December. Chile keeps raising its rates but still it can’t contain the inflation. From Bloomberg:

“Inflation is a worry in Chile and depending on how it evolves, the central bank may need to raise rates further in the first half of this year,” said Bertrand Delgado, a Latin America economist at IDEAglobal Inc. in New York.

It’s not just countries that are seeing the increases either.

Hershey’s, the chocolate maker, just announced across the board 3% increase on all of its goodies. And it gets better. From the WSJ:

In a conference call with investors yesterday, Hershey Co. Chief Executive David West said the candy maker has seen “an unprecedented run-up in costs over the last couple of years.”

Hm…”unprecedented.” Where have we seen that word before?

Oh yeah, the Domino’s Pizza CEO said the same thing just a few weeks ago.

And Kraft Foods. Cheese prices rose 50% in just the last quarter alone. From their conference call yesterday:

Irene Rosenfeld, chairman and CEO, said: “We’ve significantly reduced our cost structure and strengthened our portfolio with the acquisition of Danone’s global biscuit business and the announcement to exit the Post cereal business. While we face an unprecedented input cost environment, we enter 2008 with good momentum and remain confident that we will deliver reliable growth over the long term.”

Tyson Foods just sent notice to its food-distributors that it was pushing through a 7 percent across the board hike.

And on and on and on.

You get the picture.

And what is our Fed doing?

Cutting interest rates.

Please let me know when your cheeseburger is $20.

Oh, but remember, we don’t have inflation here. That only happens in Poland. Or Chile. Or South Africa. Or Australia. Or China.

Not in America.