The direction of interest rates was on everyone’s mind. Dallas Federal Reserve President Richard Fisher, who has voted against the Fed’s three most-recent rate cuts, hinted in a Wednesday speech that the central bank is done cutting interest rates and is prepared to raise them.

“If inflationary developments and, more important, inflation expectations continue to worsen, I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic economic scenario,” Fisher said.

“Those remarks made it more evident that the Fed’s propensity to take the overnight funds rate below 2% [is] smaller and ever smaller,” wrote Dennis Gartman, publisher of the Gartman Letter.

The job market continues to be difficult. The Labor Department reported that initial claims for state unemployment benefits rose 4,000 to 372,000 in the week ended May 24. While, according to Bear Stearns economists, claims haven’t moved into “recession territory … they continue to bounce around close to the 375,000 level that we believe is consistent with mildly recessionary conditions.”

Source: Dollar Advances vs. Euro – Central Banker Hints at Rate Hikes

Eurostat, the European statistics agency, said prices rose in March at a 3.5 percent annual rate in the 15 countries that share the euro, the highest rate since June 1992. The rate in February was 3.3 percent, which had itself been a record. Inflation is running far above the European Central Bank’s 2 percent guideline.

The concern about rising prices is not confined to the euro zone. In a speech on Monday, the governor of the Bank of England, Mervyn King, noted that “food prices on world markets are more than 50 percent higher, and oil prices two-thirds higher, than they were a year ago.”

Read on at the NYT.