Saturday, October 2, 2010
More Quantitative Easing on the Way?
William Dudley, president of the Federal Reserve Bank of New York warned that we are getting closer and closer to hitting levels of deflation. He thinks things need to be changed quickly, like increase in asset purchases. Charles Evans, president of the Federal Reserve Bank of Chicago states similar thoughts. He thinks that because of the unemployment gap, incredibly low inflation which meets price stablility, that there needs to be an "increase monetary policy accommodation to boost aggregate demand and achieve our dual mandate."
Subscribe to:
Post Comments (Atom)
like lower interest rates?
ReplyDeleteThe government can lower the interest rate, thus the demand for money will increase, people is willing to hold money in hand instead of putting money in the bank. The price will increase, and then the the inflation rate will increase.
ReplyDeleteLowering interest rates will also be a monetary fiscal policy in which people will be more likely to spend more because they are not making as much interest. In turn, total demand will increase because people will see their money as more liquid, thus spending increases.
ReplyDelete