For the second time in less than ten years time there might occur a possibility of underestimating the future inflation risk by the Federal Reserve as they plan to flow in more cash in the American economy.

Today in probability the Federal Reserve Bank will start purchasing bonds once again. This move would be taken to boost up the economic growth of the country which is likely to go up by two decimal six percent in the second quarter of 2011 from two percent of the last quarter according to surveys on economists done by Bloomberg News.

In all probability the Feds will purchase securities worth five hundred billion dollars or more as per twenty nine out of fifty six of economists those were surveyed.

Fed chairperson Ben S Bernanke might go down the same path taken in 2003-04 regarding policy by increasing the Fed assets. At that time the rates of interest were kept at a record low in spite of the rising inflation which jumped faster than anticipated

According to an economist of San Diego's University of California, James D Hamilton Bernanke might take the risk of hiking up expectations of higher inflation very much which might shake up the bond and currency markets. Hamilton further stated that even the thought of this can bring about a series of challenges to be faced with immediate effect. It might give rise to people buying fewer dollars. Commodity speculation will happen and treasuries will face under subscription.

So the role of Fed is very crucial in this matter.

According to seven economists surveyed the unprecedented stimulus might cause inflation to exceed two percent, which is more than what the Fed would prefer it to be barring food and energy.