"SOMEWHAT surprisingly, inflation has been picking up in America in recent months. Not in any worrying way; indeed, the Fed's preferred gauge of inflation, the price index for personal consumption expenditures, remains below the 2% target, as it has done for most of the last four years. But the move upward since late 2015 is unmistakable, and amid what looks like the end (for now, at least) of a long boom for the dollar and a long bust for oil prices, a rise in inflation to and above 2% seems increasingly likely. Above-target inflation is an opportunity for the Fed."
It is known that U.S inflation has been very low for a period long time, so, I found this article useful to talk about fed's approach.
http://www.economist.com/blogs/freeexchange/2016/03/low-end-theory
It is good hear that the inflation is finally going to get over 2%. This shows that people are most likely consuming more in the market. Furthermore, it will be interesting to see if these predictions will come true or not in the near future!
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ReplyDeleteThe problem for the US economy after the 2008 crisis is that inflation is too low,hence the central banks have little room to improve the economy through monetary policies without cause the nominal interest rate to become negative. This change might be good for the overall economy.
ReplyDeleteI find it interesting that the article suggests that the U.S would have had higher inflation had it not been for the world interst rate. If the U.S as a large open market is unable to have a profound effect on the world interest rate by changings its own polocies, I think it is one of the greatest indications that the U.S (in terms of Economics) is no longer the only world Super Power.
ReplyDeletewith inflation finally going upward it is good to see that people are consuming more in the market. this could be good for the fed as it has not changed in years. this might give the fed a chance to put in a monitor policy.
ReplyDeleteAs we have recently discussed in class, inflation has been down for the past few years since the recession. Since the Fed aims to keep inflation at about 2% every year, it is important that they take the necessary measures to ensure this happens.
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