Jump to content

Fed members seek historic shift in money supply


Geee

Recommended Posts

2645044

The Fed’s current framework is to target inflation at 2 percent. The minutes suggested that officials were particularly interested in the possibility of replacing that target with one of two alternatives.
One would be a price level, rather than a rate of inflation. The other would be gross domestic product, unadjusted for inflation.
The price level could be, for instance, the Consumer Price Index or a similar gauge of the prices of a basket of goods and services. Rather than target the year-to-year inflation rate, the Fed would target a predetermined growing total level of the CPI or equivalent measure.
Either one of those standards would have called on the Fed to pursue a more expansionary monetary policy than it did in the years following the last recession. Following the financial crisis, the Fed took the unprecedented step of lowering its interest rate target all the way to zero and then purchasing trillions of bonds, but nevertheless saw inflation fall below target for most of the next nine years.
A level target would entail more aggressive monetary policy.:snip:

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • 1716906105
×
×
  • Create New...