Remarkably, the latest monetary policy statement from the Federal Reserve, released today, indicates no fear of accelerating price inflation. This despite the fact that price inflation at the consumer level is bumping up against the Fed's price inflation target of 2.0%.
In its statement, the Fed announced it would reduce its monthly bond-buying program but, more importantly, the Fed announced, in its statement that it will hold interest rates near zero.
The Fed also slashed its outlook for full-year economic growth, cutting gross domestic product from a 2.8 percent to 3 percent range expressed in March down to 2.1 percent to 2.3 percent.
Bottom line: The inflationsists are in charge, including Fed chair Janet Yellen and the new vice-chair Stanley Fischer. When price inflation accelerates, the Fed is going to respond very late and nowhere near aggressively enough to hall the inflation.
The full policy statement is here.
-RW
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