- Fed Governor Jerome Powell says below-target inflation is "kind of a mystery" since the labor market is tightening.
- The weak inflation gives the Fed the "ability to be patient" regarding future rate hikes, Powell says.
- The Fed governor also expects some kind of action on taxes next year, but isn't really factoring it into his economic forecasts yet.
The United States has a problem: not enough inflation.
That notion is a bit of a head-scratcher. Most people don’t like inflation. They would prefer that a dollar tomorrow be worth the same as a dollar today.
But a recent drop in inflation may be a sign of fresh economic weakness and is perplexing to Federal Reserve officials who are now wrapping up the central bank’s stimulus campaign.
The Federal Reserve thinks modest inflation has important economic benefits, and it has aimed since 2012 to keep prices rising at an annual pace of 2 percent. The problem is that the Fed is on track to fail for the sixth straight year. Inflation has been stubbornly sluggish.
What do you guys think of inflation being this low? Are we propping up the economy (stagnant wages, etc.) with extremely low interest rates?
Submitted September 03, 2017 at 01:48PM by pangolin44 http://ift.tt/2ezYtCn
